The Digital Double-Edged Sword: Research on the Impact of Digital Finance on Enterprise Pay Gap

Abstract

Digital finance, as an important form of deep integration of digital technology and financial services, is profoundly affecting corporate financing environment, business models, and organizational structure. However, whether the economic benefits brought by digital finance can be evenly distributed among different labor groups within enterprises remains to be further studied. Based on data from Chinese A-share listed companies and the Peking University Digital Financial Inclusion Index, this paper employs a two-way fixed effects model to examine the impact of digital finance on enterprise pay gap. The study finds that the development of digital finance is significantly associated with a wider internal pay gap within enterprises. Mechanism analysis further suggests that digital transformation and managerial myopia may represent two potential channels through which this association operates. On the one hand, digital finance may alleviate corporate financing constraints, thereby providing greater resources for investment in digital technologies and potentially increasing the pay premium for high-skilled labor. On the other hand, digital finance may be associated with greater corporate information transparency and external supervision pressure, which may strengthen management's short-term performance orientation and potentially contribute to a greater concentration of compensation resources toward core talent. Heterogeneity analysis finds that this effect is more significant in state-owned enterprises and enterprises in non-eastern regions. This paper reveals the dual impact of digital finance, where "efficiency improvement" and "distribution differentiation" coexist, providing a new research perspective for understanding changes in corporate income distribution in the digital economy era.