A re-examination of the influence of human capital on urban-rural income gap in China: College enrollment expansion, digital economy and spatial spillover

Abstract

In the context of the era of common prosperity, this paper seeks to explore the influence of human capital on the urban-rural income gap in China. To accomplish this, this paper utilizes panel data encompassing 31 provincial-level administrative regions spanning the years 2000 to 2019. Employing a combination of econometric techniques, including 2SLS, Difference-in-difference models, moderating effects models, and the spatial Durbin model, this paper investigates various facets of human capital and its impact on the urban-rural income gap. The key findings of this paper are as follows: (1) The relationship between human capital and the urban-rural income gap exhibits a U-shaped pattern. (2) The college enrollment expansion policy leads to the widening of the urban-rural income gap in China driven by factors related to the scale, quality, and inequality within higher education. (3) The digital economy plays a positive moderating role in the U-shaped relationship between human capital and the urban-rural income gap. (4) Human capital's impact on the urban-rural income gap demonstrates a significant spatial correlation, displaying a U-shaped spatial spillover effect. Drawing from the aforementioned findings, this paper offers valuable policy implications to guide policymakers in their efforts to foster the attainment of common prosperity.