Digital Infrastructure and Firm Labor Productivity: Evidence from the Implementation of China’s Labor Contract Law

This paper utilizes panel data of Chinese A-share listed manufacturing firms from 2006 to 2022 and measures regional digital infrastructure by the number of internet broadband access ports per capita. It systematically examines the moderating role of digital infrastructure in the relationship between labor protection policies and firms’ labor productivity. The findings are as follows: (1) Digital infrastructure exhibits a positive moderating effect on the relationship between the Labor Contract Law and firms’ labor productivity. This conclusion remains generally robust across multiple robustness tests and endogeneity treatments, and the direction of the results remains consistent after applying an instrumental variable approach to alleviate endogeneity concerns. (2) The digital transformation channel exhibits a negative relationship, indicating that compliance pressure associated with the institutional reform generates a short-term “crowding-out effect” on firms’ digital investment; the human capital channel shows a positive relationship, indicating that digital infrastructure strengthens the institutional effect by improving the level of urban human capital. (3) The moderating effect is particularly pronounced in cities with strong digital industry foundations, abundant fiscal resources, and firms that have not received government digital subsidies. These results provide empirical support for optimizing the supporting environment of labor protection policies, accelerating digital infrastructure development, and enhancing enterprise adaptability to institutional changes.