Digital Revolution and Job Quality of Lower Class Workers: Quasi‐experimental Evidence from the Broadband China Program

• Published date: 01 July 2024
• Author: Xiumei Wang,Ye Jiang,Famin Yi
• Date: 01 July 2024
• DOI: http://doi.org/10.1111/cwe.12538

©2024 Institute of World Economics and Politics, Chinese Academy of Social Sciences

China & World Economy / 146–178, Vol. 32, No. 4, 2024

146

Digital Revolution and Job Quality of Lower Class

Workers: Quasi-experimental Evidence from

the Broadband China Program

Xiumei Wang, Ye Jiang, Famin Yi*

Abstract

This study examines the impact of the digital revolution on the job quality of workers

with a specific focus on those at the lowest end of the spectrum in China’s domestic labor

market. Leveraging exogenous timing variations that result from the implementation of

the Broadband China Program across different cities, it provides quasi-experimental

evidence concerning the effects of the digital revolution on the job quality of lower class

workers, particularly rural–urban migrant workers. Using data from China Migrants

Dynamic Survey, this study reveals that migrants’ comprehensive job quality index

increased by 0.0138 (5.33 percent), and its component indices experienced positive

effects after the Broadband China Program was implemented. This study also investigates

heterogeneous policy treatment effects among workers with diverse demographic and

occupational characteristics. Underlying mechanisms are considered, including positive

macroeconomic shocks, increased social interactions, and Internet use. In particular,

migrants’ attitudes toward local settlement became more positive, suggesting that the

positive effects of the digital revolution on livelihood lasted for some time. Taking

China as an example, this study contributes valuable empirical evidence of how the

digital revolution can affect lower class workers’ employment or living conditions in a

developing country. Related policy implications are also considered.

Keywords: Broadband China Program, digital revolution, job quality, lower class

workers, rural–urban migrants

JEL codes: J21, O15, R23

I. Introduction

The construction of information infrastructure (e.g., the Internet, 5G) has spearheaded

the digital revolution, contributing significantly to technological innovation, industrial

*Xiumei Wang, Lecturer, School of Business, Fuyang Normal University, China. Email: wxm_scau@163.com;

Ye Jiang, Assistant Professor, Department of Economics, Dickinson College, USA. Email: jiangy@dickinson.edu;

Famin Yi (corresponding author), Professor, School of Economics and Management, South China Agricultural

University, China. Email: yifamin@126.com. This research was supported financially by the National Social

Science Foundation of China (No. 19BGL256).

©2024 Institute of World Economics and Politics, Chinese Academy of Social Sciences

Digital Revolution and Job Quality of Lower Class Workers 147

development, and sustainable macroeconomic growth. Numerous studies have

highlighted the positive effects of the digital revolution on local workers’ employment

or earnings (Hjort and Poulsen, 2019; Wang et al., 2022) but it is noteworthy that the

commonly used micro-level survey data or administrative data in these studies primarily

capture responses from overall labor market participants, most of whom are employed

within the formal sector. Economists often overlook lower class workers in the domestic

labor market, who frequently engage in flexible and informal employment and are less

resilient to macroeconomic shocks (Aoki and Ishioka, 2023). Despite being an emerging

and increasingly vital labor force, particularly in developing countries like China, the

lower class workers and their job quality in the new era of the digital revolution have

received limited attention. Moreover, understanding how workers at the lowest of the

labor market responded to the digital revolution poses practical challenges, including

the scarcity of reliable large-scale survey data and the endogeneity of employment

choices. To address these concerns, this paper adopted a quasi-experimental estimation

framework, aiming to examine empirically the impact of the digital revolution on the

lower class workers in the domestic labor market, with a primary focus on their job

quality.

The motivations for this study are as follows. First, although the existing literature

has underscored the pivotal role of the digital revolution in propelling economic growth

and enhancing workers’ employment and livelihoods, there remains a significant

gap in understanding its impact on the lower class workers within the domestic labor

market. Zuo (2021) focused on low-income Americans and established a positive link

between subsidized Internet access and labor market outcomes. However, the digital

revolution encompasses a much broader scope, including macroeconomic changes

in information infrastructure, large-scale adoption of digital technology, and further

industrial development, which could benefit employment outcomes of lowest earning

workers in more varied ways. At the same time, there is the possibility of risks for the

lower class workers as they can be replaced or crowded out of the labor market because

of technological progress (Acemoglu and Restrepo, 2018) during the digital revolution

era. Given ambiguous theoretical predictions, and recognizing the multifaceted nature of

the digital revolution, this study aimed to investigate the nuanced relationship between

the digital revolution and concurrent changes in job quality for these workers.

Second, the existing literature has already suggested that the digital revolution

brings significant macroeconomic changes; it is therefore important to examine the

impact of these shifts on workers at the bottom of the domestic labor market. We are

concerned about workers who are the most vulnerable among all local labor market

participants due to the lack of necessary social benefits or employment security

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©2024 Institute of World Economics and Politics, Chinese Academy of Social Sciences

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(Aoki and Ishioka, 2023). Adding to their precarious situation, jobs for these workers

typically entail low-skill requirements, rendering them cost-effective substitutes in a

highly competitive labor market (Khan and Surisetti, 2023). This heightened competition

worsens their circumstances in local labor markets. Unlike in developed countries, in

many developing countries such workers are disproportionally employed in large labor-

intensive sectors such as manufacturing and construction (Hofman and Steijn, 2003) and

play a fundamental role in economic growth (Leonhardt and Chu, 2017).

This study used Chinese rural–urban migrant workers as an example of low-

paid workers to analyze the impacts of the digital revolution. As in many developing

countries, Chinese rural–urban migrant workers leave impoverished villages to

pursue more lucrative off-farm employment in economically developed urban areas.

Compared with native urban residents, rural–urban migrants often experience unequal

treatment and even discrimination due to a lack of legal access (urban hukou) to social

security or benefits in the urban labor market.1 Often relegated to the bottom of the

urban labor market (Afridi et al., 2015), these migrants undertake marginal jobs in

physically demanding or technical sectors (Knight and Yueh, 2008). Their employment

is characterized by a lack of secure work contracts and social benefits, rendering them

easily replaceable and exposed to a high risk of job loss. However, as the biggest

developing country in the world, China has nearly 300 million rural–urban migrants

working and living in urban areas, who have a major role in contributing to industrial

development, the urbanization process, and economic globalization.2

This study contributes to the existing literature with robust quantitative evidence on

how the digital revolution affected lower class workers’ job quality based on a quasi-

experimental analysis of Chinese rural–urban migrant workers. To alleviate endogeneity-

related concerns effectively, a difference-in-differences (DID) analysis was conducted

based on exogenous city-level policy variations of the Broadband China Program, a key

policy initiative within China’s digital revolution. More specifically, this study attempts

to derive causal inferences regarding how the Broadband China Program affected

rural–urban migrant workers’ job quality, exploring possible heterogeneity among

migrants and underlying mechanisms such as concurrent macroeconomic changes and

the role of social interactions. The study also provides an extended analysis related

to changes in migrants’ attitudes to local settlement. It scrutinizes its initial findings

and ensures their reliability through a series of robustness checks, which rule out

1China’s unique hukou system classified its citizens into two categories (Chan and Zhang, 1999): agricultural

hukou (rural hukou) and nonagricultural hukou (urban hukou).

2Detailed information is available from: https://www.gov.cn/lianbo/bumen/202402/content_6934935.htm.