Research on the Effect of Internet Development on Labor Productivity

Abstract

With the implementation of the “Internet plus†strategy, an unprecedented digital revolution is spreading like a storm in China. Based on the panel data of China's 31 provinces from 2003-2014, this paper empirically study the influence of Internet penetration rate on labor productivity, and compares the differences between the eastern, middle and western regions. The results show that the Internet penetration rate has a significant positive impact on the labor productivity. In the long run, assuming other factors stay constant, increasing the Internet penetration rate by one percent increases the labor productivity by about 0.357%, that is, the average annual output of each worker increased about 35.7 yuan. And this positive effect is different between regions, the eastern is the largest, followed by the central, and the western is the minimum. Finally, the paper puts forward some corresponding countermeasures and suggestions on the basis of the empirical analysis.