Digital economy, industrial structure upgrading, and residents' consumption: Empirical evidence from prefecture-level cities in China

Abstract

In the context of promoting high-quality economic development, how to use digital technology to empower industrial transformation and upgrading, and then drive consumption growth, has become a critical issue that needs to be solved urgently. Based on the panel data of prefecture-level cities in China from 2011 to 2020, this paper has discussed the influence of the digital economy on residents' consumption and its internal mechanism. Theoretical analysis and empirical test results show that, firstly, the digital economy has a positive effect on residents' consumption, and this conclusion is still valid after the endogenous test and robustness test. Secondly, mechanism analysis results confirm that industrial structure upgrading is the main channel through which the positive mediating effect operates. Thirdly, the influence of the digital economy is only valid for rural areas rather than urban areas, and more significant for western regions than eastern and central regions, which indicates the development of the digital economy is beneficial to narrowing the consumption gap. Finally, the positive impact of the digital economy on residents' consumption is continuously strengthened with the upgrading of industrial structure, which is a significant non-linear characteristic of the marginal effect increasing. The above research conclusions can provide a theoretical basis for further improving the infrastructure of the digital economy, accelerating the integration of the digital economy with traditional industries, and building a consumer Internet.