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The rapid expansion of e-commerce into rural areas has emerged as a prominent policy initiative aimed at promoting digital economic development and facilitating structural transformation in developing countries. However, empirical evidence on whether and how such policies affect rural labor markets remains limited. This paper investigates the impact of China’s E-commerce into Rural Areas Policy on non-agricultural employment among rural residents. We develop a theoretical framework in which an individual’s utility derives from commodity consumption, leisure, and social recognition associated with e-commerce participation. The model predicts that reducing the investment price of e-commerce activities—the primary intervention of the policy—increases non-agricultural labor supply through both direct and indirect channels. Using panel data from the China Family Panel Studies (CFPS) spanning 2010 to 2022 and exploiting the staggered rollout of the Rural E-commerce Demonstration Pilot as a quasi-natural experiment, we employ a difference-in-differences (DID) approach to estimate the policy’s causal effects. The results show that the policy marginally significantly increases the probability of non-agricultural employment by approximately 1.1 percentage points, an effect that remains robust after parallel trend tests, placebo tests, and controlling for concurrent policies. Mechanism analysis reveals that the policy operates through two distinct channels: promoting regional industrial development, particularly the growth of the tertiary sector, and generating village-level peer economic incentives that encourage participation through social networks and information spillovers. Heterogeneity analysis indicates that the policy’s effects are larger for males, younger individuals, those with higher educational attainment, and residents of poor counties or regions with e-commerce potential. These findings contribute to the literature on digital development and rural labor markets by providing rigorous causal evidence and identifying the mechanisms underlying the policy’s effectiveness. The results also offer practical insights for policymakers seeking to leverage digital technologies for rural employment generation and structural transformation.
Zhong et al. (Wed,) studied this question.