Has the digital economy improved the consumption of poor and subsistence households?

Abstract

Using Chinese Family Panel Studies (CFPS) database from 2012 to 2018, this paper examines the impacts and transmission mechanisms of the digital economic growth on the consumption of the poor and subsistence households. The results show that the digital economy negatively affects the consumption of the poor and subsistence households, with a more prominent effect on the poor families. Mechanism analysis indicates that digital economic development reduces the consumption of poor and subsistence households mainly by exacerbating the uncertainties they face in labor market (higher unemployment risk and expected income uncertainty) and the inequality of wealth distribution (higher deprivation of income and wealth). Further analyses reveal that the digital economy has greater negative impacts on households with less material, human and social capital endowments, and leads no significant improvements in the consumption environment for the disadvantaged households.