Employment Effects of Digital Transformation: From the Perspective of Backward Spillovers in the Industrial Chain

ABSTRACT There have been studies focusing on the impact of enterprises' digital transformation (DT) on their own development but rarely exploring the employment effects of DT from the perspective of the industrial chain. This paper explores the employment effects of DT from the perspective of backward spillovers in the industrial chain. Using the data of listed companies from 2007 to 2022, the paper constructs the “upstream‐downstream‐year” dataset to study the impact of the degree of DT of downstream enterprises on the employment of upstream enterprises. It is found that the DT of downstream enterprises has a significant creation effect on the employment scale of upstream enterprises. In terms of the mechanism, the DT of downstream enterprises affects the employment of upstream enterprises through the reverse effect, spillover effect, and synergistic effect. When the upstream companies have low customer concentration or are in highly competitive markets, and when the downstream enterprise is larger in scale, the employment effects of DT in downstream firms on upstream firms will be more significant. Further analysis shows that the DT of downstream firms can significantly increase the employment compensation of upstream firms and shift their employment structure toward medium‐ and high‐skilled labor.