Does Urban Digital Infrastructure Bring Skill-Biased Technological Change? Evidence from China

The technological attributes of urban digital infrastructure (UDI) are transforming labor skill structures in the market, thereby altering changes in skill premiums. This study investigates the relationship between UDI and skill premiums by developing a theoretical model that incorporates both digital and material capital. Using data from the China Labor Force Dynamic Survey and urban statistics, we examine the underlying mechanisms. The findings indicate that UDI exhibits skill-biased technological attributes, thereby increasing the skill premium. UDI development raises the demand for high-skilled labor across both skill-intensive and non-skill-intensive industries, altering the labor skill structure and consequently elevating the skill premium. This effect stems from the complementarity between UDI-related digital capital and high-skilled labor. Compared to material capital, deepening digital capital enables high-skilled labor to contribute more significantly to output.