Does digital technology increase the labor income share of enterprises?

Under the wave of the digital economy, digital technology is considered a new driving force for common prosperity. The impact of digital technology on the labor income share and its mechanism are examined in this research using a sample of Chinese A-share listed enterprises between 2010 and 2021. We show that by maximizing the human capital structure and easing financing constraints, digital technology can increase the labor income share of enterprises. In addition, our research indicates that digital technology expands the overall employment scale of the labor market and alleviates employment pressure. Heterogeneity analysis based on firm ownership, firm location, and firm industry reveals that the promoting effect of digital technology on labor income share is stronger for non-state-owned enterprises, enterprises in China's central and western regions, and capital-technology-intensive enterprises. The study presented in this paper can offer a convincing justification for the increasing the income share, and it can offer pertinent recommendations for improving the acceleration of business digital transformation and overall prosperity.