The Effect of Local Internet Development on Employees’ Salary: Evidence from China

ABSTRACT

Using empirical data from China, this study examines the impact of local internet development on non-executive employees’ salaries. Research findings show that internet development can increase employees’ salary and pay-performance sensitivity. This effect can be more significant in non-state-owned enterprises (Non-SOEs for short), firms faced with fierce competition, and firms paid little attention to employee protection. Mechanism analysis finds that the positive impact of internet development on increasing total factor productivity and reducing information asymmetry can partly interpret the effect. From the perspective of employees’ salaries, this study sheds light on the impact of technological progress on micro-production relations.

KEYWORDS:

• Internet development
• employees’ salary
• pay-performance sensitivity
• total factor productivity
• information asymmetry

JEL:

• M41

Disclosure Statement

No potential conflict of interest was reported by the author(s).

Supplementary Material

Supplemental data for this article can be accessed online at https://doi.org/10.1080/1540496X.2023.2298253.

Notes

1. CPI index is from the National Bureau of Statistics.

2. exp(11.285)$\approx$79618

3. This is calculated using the base period (2010) USD to RMB exchange rate, that is 1 dollar = 6.6227 RMB.

4. In China, stock exchanges mandate specific listed firms, such as those included in Shenzhen 100 Index, to disclose CSR reports while encouraging other firms to disclose CSR reports voluntarily.

5. The firms do not disclose CSR reports are classified into the group of weak employee protection.

6. The regression results are presented in supplementary documents.

Additional information

Funding

This research was supported by NSFC grant [72121001], NSFC grant [72302067].