While e-commerce has dramatically changed the landscape of the economy in many countries, we still lack a comprehensive understanding of how e-commerce affects job and income distribution. In this paper, I link regional e-commerce development, measured by its extensive and intensive margins, to labor market outcomes. The oligopoly telecommunications industry in China and an Internet policy launched in 2015 allow me to identify the causal effect by applying an instrumental variable strategy. I establish that e-commerce increases average employment rates, individual wages, and total household incomes, but young- and middle-aged workers benefit more. People exposed to active e-commerce markets tend to quit the agricultural sector and get middle-skilled occupations in enterprises. Evidence...[ Read more ]

While e-commerce has dramatically changed the landscape of the economy in many countries, we still lack a comprehensive understanding of how e-commerce affects job and income distribution. In this paper, I link regional e-commerce development, measured by its extensive and intensive margins, to labor market outcomes. The oligopoly telecommunications industry in China and an Internet policy launched in 2015 allow me to identify the causal effect by applying an instrumental variable strategy. I establish that e-commerce increases average employment rates, individual wages, and total household incomes, but young- and middle-aged workers benefit more. People exposed to active e-commerce markets tend to quit the agricultural sector and get middle-skilled occupations in enterprises. Evidence also suggests that the intense competition in the online marketplace will crowd out individual businesses and induce more job-switching, especially for the older workforce. Low-educated workers can also benefit from the development of e-commerce. Finally, I document that a booming e-commerce market is associated with more firm creation, presumably more employment opportunities, and a higher proportion of firms running e-commerce-related businesses. These results suggest that e-commerce can serve as a promising driver of structural transformation.