The Promotion Effect and Substitution Effect of Digital Financial Inclusion on Employment

Currently, the global job market is facing severe challenges with high unemployment rates and widespread difficulties in finding employment. However, digital financial inclusion technology provides new solutions for employment issues. Through digital technology, inclusive finance can be more widely covered, not only innovating financial services, but also providing entrepreneurs with more financial support. The development of digital financial inclusion not only promotes the rise of emerging industries, but also provides an important way to solve the problem of employment difficulties and injects new vitality into the labor market. In this paper, digital finance is divided into total digital finance index, coverage width, depth of use and payment index by using the digital inclusive finance data of The Digital Finance Research Center of Peking University from 2011 to 2016and panel data of 31 provincial administrative regions in China, using the fixed effect model. The regional heterogeneity analysis and lag effect analysis of the promotion and substitution effect of digital finance on employment show that the substitution effect of digital finance is weaker in the developed eastern region than in the less developed central and western regions. Digital finance has a stronger promotion effect on the less developed areas in central and western China because of its universality. Digital finance will have a negative effect on employment in the short term, and the substitution effect is greater than the promotion effect, but in the long term, it will turn into a positive effect, and the promotion effect is greater than the substitution effect.