Does the development of digital economy infrastructure reduce the urban-rural income gap? Theoretical experience and empirical data from China

Abstract

PurposeSince 2017, China's digital economy has accounted for more than 30% of the country's GDP. The digital economy has become the main driving force of China's economic development. Moreover, the digital economy has also changed the traditional modes of production and distribution between urban and rural areas. This paper aims to explore the influential mechanism of digital economy infrastructure (DEI) on the urban-rural income gap (URIG).Design/methodology/approachBy analyzing the theoretical model of the URIG, this paper constructs a theoretical analysis framework and clarifies the key roles of rural land circulation (RLC) and resident population urbanization (RPU) in the relationship between DEI and the URIG.FindingsThe DEI can effectively reduce the URIG; the regression coefficient (RC) was −0.109. The reduction effect is mainly reflected in: 1) the wage income gap between urban and rural residents (RC = −0.128) and 2) the net property income gap of urban and rural residents (RC = −0.321). Also, for the spatial spillover effect, the path effect of “DEI – RLC – URIG” is almost equal to the path effect of “DEI – RPU – URIG”; for the local effect, the path effect of the former is far smaller than the latter. Moreover, when the RPU reaches the threshold of 86.29%, the DEI will expand the URIG (RC = 0.201).Originality/valueThis paper proposes a theoretical framework for the impact of DEI on the URIG, explores the mechanism of RLC and RPU in the DEI and URIG and enriches the theory of traditional research on URIG.