Research on the impact of digital technology on service employment is of great practical significance for boosting the high-quality development of China’s service industry, narrowing the economic gap between the North and the South, and building a new pattern of development.Based on the division of labor theory of emerging classical economics, this paper firstly constructs a micro mechanism model to explain the internal mechanism of digital technology’s impact on service employment. Secondly, it measures and evaluates the digital technology development level and transaction efficiency index of 30 provincial administrative regions in China from 2008 to 2018 with the help of principal component analysis.Finally, using econometric methods such as spatial panel model, we empirically test the quantitative impact of digital technology on service employment.Research results show the reason that the digital technology expand employment service is mainly through improving the transaction efficiency, promoting the industry division of labor and expanding the size of the market. Digital technology does not reduce employment service in labor intensive, capital intensive and knowledge intensive service jobs from the overall size and, in turn, increasing the heterogeneity of influence.Due to the large gap in the level of digital technology between the South and the North, the impact of digital technology on service employment in the South is significantly higher than that in the North, which to a certain extent also reflects the economic gap between the North and the South and the unbalanced and inadequate regional development.Further, through spatial econometric test, it is found that the influence of digital technology on service employment has spatial spillover, which has important policy implications for how to narrow the economic development gap between the north and the south and achieve coordinated regional development under the condition of digital economy.