Digital Economy Development and the Urban–Rural Income Gap: Intensifying or Reducing

Abstract

Based on theoretical analysis, this study examines the relationship between the development of China’s digital economy and the urban–rural income gap by using an empirical model to test panel data for 30 provinces in China from 2009 to 2019. The results of the study reveal that (1) there is a “U-shaped” relationship between the digital economy and the urban–rural income gap, with the gap narrowing in the early stages of development and widening in the medium-to-long term. (2) The development of the digital economy in peripheral regions will have an impact on the urban–rural income gap in the region through spatial spillover. (3) The heterogeneity tests reveal that the digital economy has a stronger impact on the urban–rural income gap in western China and a weaker impact in the east. (4) A double difference test using “Broadband Rural” construction as a policy shock variable reveals that the pilot project helped reduce the urban–rural income gap. This study deepens our understanding of the digital economy for integrated urban–rural development. It provides a theoretical basis and practical experience for enhancing the living standard of rural residents and promoting the integrated development of urban and rural areas.

Keywords

• digital economy
• urban–rural income gap
• space spillover
• heterogeneity