Digital finance and labor demand of manufacturing enterprises: Theoretical mechanism and heterogeneity analysis

With the new situations and new changes in the employment market in the new era, digital finance must highlight the employment-first policy in promoting high-quality economic development and enhancing targeted services for employment with financial resources. Based on the panel data of 298 prefecture-level cities in China from 2014 to 2019, and the big data on labor demand of manufacturing enterprises from Zhaopin as samples, this paper analyzes the impact of digital finance on the scale and structure of labor demand in China's manufacturing enterprises from the perspectives of theoretical logic and empirical evidence. The mechanism of action and the influence of heterogeneity are also systematically analyzed. Conclusions are drawn based on the research: Firstly, the development of digital finance can significantly and effectively promote the labor demand of manufacturing enterprises. Digital finance affects the scale of labor demand through financing constraints, and affects the structure of labor demand through operating costs, with positive effects on high-skilled labor demand. Secondly, considering the differences at the industry level and the city level, digital finance has a more significant role in improving the labor demand of enterprises in highly financial-dependent and technology-intensive industries and enterprises in small cities. Thirdly, compared with large and medium-sized enterprises and listed enterprises, small and micro-enterprises and non-listed enterprises are more likely to expand their labor demand thanks to the development of digital finance. Fourthly, digital finance is more conducive to promoting employment and increasing corporate demand for people who receive higher education, have no work experience, and apply for financial management positions. The conclusions are of great implications for us to give full play to the power of digital finance to eliminate impediments in the development of enterprises and increase support for them to stabilize and expand employment.