Abstract: After the Chinese economy entered a new era, the rapid development of the digital economy has brought new challenges to the urban and rural labor employment markets. Unlike previous studies on the urban and rural labor employment markets in the context of traditional economic development, this article incorporates the development of the digital economy into the same research framework as China's urban and rural labor employment markets to explore the impact of digital economy shocks on the urban and rural labor employment markets. In theory, the paper constructs a theoretical model for the division of marginal labor productivity and labor mobility between urban and rural areas under the background of digital economy impact; Empirically, based on provincial panel data from 2013 to 2020 in China, the impact and mechanism of the digital economy on urban and rural labor employment markets were tested, and the effectiveness of digital finance was further analyzed. Research has found that, firstly, the digital economy significantly promotes the segmentation of urban and rural labor employment markets, and this conclusion still holds after conducting robustness tests using various methods. Secondly, the impact of the digital economy on the segmentation of urban and rural labor markets exhibits regional heterogeneity differences; In addition, the division of ownership is an important condition for the digital economy to promote the division of urban and rural labor markets. Thirdly, the development of digital economy related industries and the transformation and upgrading of regional industrial structures are effective mechanisms for the impact of digital economy on the segmentation of urban and rural labor employment markets. Fourthly, as a model of industrial digital integration, digital finance significantly suppresses the segmentation of urban and rural labor employment markets. This conclusion can provide useful references for exploring the changes that the digital economy has brought to the urban and rural labor employment markets, as well as the mechanisms behind these changes.

Key words: digital economy, urban and rural development, labor market segmentation, digital finance