Digital Inclusive Finance Development and Labor Productivity: Based on a Capital-Deepening Perspective

Abstract

This paper examines the impact of digital inclusive finance development on labor productivity and its transmission channels using panel data from 30 provinces in China during 2011–2020. According to empirical findings, the growth of digital inclusive finance significantly improves labor productivity in China. This conclusion holds even after taking into account endogeneity problems and robustness tests. Regarding transmission channels, digital inclusive finance development enhances labor productivity by promoting capital deepening. From the perspective of the three dimensions of the current digital inclusive finance development stage, the coverage width significantly boosts labor productivity. From a regional perspective, digital inclusive finance development has a more significant impact on labor productivity in the eastern region compared to the central and western areas. From an industry perspective, digital inclusive finance development significantly enhances labor productivity in the primary and tertiary industries.