The AI Redemption: How technology is rewriting the rules of cross-industry labor mobility

This study considers the evolution and iteration of digital technology, conducting both theoretical and empirical research on the effects of information technology and artificial intelligence technology on cross-industry labor mobility. Theoretically, we construct a general equilibrium model that includes labor and digital technology to analyze the intrinsic mechanisms by which digital technology affects cross-industry labor mobility. Empirically, using the probit model and the instrumental variable approach, we find robust evidence of a significant positive effect of digital technology on cross-industry labor mobility through the pooled four-wave data from the China Family Panel Studies (CFPS) from 2014 to 2020. The findings indicate that digital technology significantly promotes cross-industry labor mobility. Mechanism analysis reveals that information technology, represented by computers, drives low-skilled labor towards non-skill-intensive industries through substitution and productivity effects, while artificial intelligence technology promotes the flow of both low-skilled and high-skilled labor towards skill-intensive industries through “de-skilling” and “re-skilling”. The impact of digital technology on cross-industry labor mobility varies significantly across different genders, the type of hukou, age, and employment types. Further mechanism analysis suggests that digital technology facilitates higher wage gains by promoting cross-industry labor mobility.