According to Washington State University, studies have found wood chips to be one of the best performers in terms of moisture retention, temperature moderation, weed control, and sustainability.
Wood chips are economically practical choices. Unlike uniformly textured sawdust and bark mulches, arborist wood chips include bark, wood, and often leaves the chemical and physical diversity of these materials resists the compaction often found in sawdust and bark mulches.
Additionally, the materials vary in their size and decomposition rate, creating a more diverse environment that houses a diversity of microbes, insects and other organisms.
A biologically diverse soil community is more resistant to environmental disturbance and will in turn support a diverse and healthy plant population. Thus, wood chips supply nutrients slowly to the system; at the same time they absorb significant amounts of water that is slowly released to the soil. It is not surprising that wood chips have been cited as superior mulches for enhanced plant productivity.
Wood chips have been especially effective in helping establish trees and native plants in urban and disturbed environments.
References: Washington State University