March 10, 2026Economics and Politics0 citations
View Full PaperHow Metro Expansion Influences Enterprise Labor Misallocation
Key Points
- To explore the relationship between metro expansion and labor misallocation in Chinese enterprises.
- Utilized a double machine learning model for analysis.
- Analyzed data from A-share listed companies between 2013 and 2022.
- Examined differences based on enterprise type and urban development levels.
- Metro expansion significantly reduces labor misallocation.
- Effects are stronger in labor-intensive and state-owned enterprises.
- Improved job-matching efficiency due to deeper labor markets.
- Increased competition lowers market power, enhancing wage alignment with productivity.
Abstract
ABSTRACT This paper investigates the effect of metro expansion on enterprise labor misallocation in China, using a double machine learning (DML) model with data from A‐share listed companies from 2013 to 2022. Our findings reveal that metro expansion significantly mitigates enterprises' labor misallocation. This effect is more pronounced for labor‐intensive and state‐owned enterprises, as well as for those located in developing urban agglomerations and regions with advanced digital infrastructure. Further mechanism analysis shows that this reduction operates through two distinct channels. On the supply side, metro networks deepen the labor market, thereby improving job‐matching efficiency. On the demand side, by intensifying competition, metro expansion erodes enterprises' market power, thereby improving allocative efficiency through the realignment of wages with marginal productivity. This study provides empirical evidence at the micro level, highlighting the role of urban transit infrastructure in improving resource allocation.