How internet access impacts rural households’ income in China: evidence from the China family panel survey

Abstract

ABSTRACT Internet access in China has sharply increased, but the potential effect of internet access on rural households’ income and inequality in developing countries could be more complex. To fill in this gap, this study uses data from the China Family Panel Survey in 2014, 2016 and 2018 to examine the impact of internet access on rural households’ income. Ordinary least squares and instrument variable regression results reveal that internet access is correlated with increasing rural households’ income, and this effect among wealthy rural households is smaller than that among poor households. The mechanism analysis reveals that internet access increases labour supply and the probability of working in secondary industry. In addition, internet access changes rural residents’ subjective assessment of employment and social security, and internet access related to learning, working, social interaction, entertainment and business positively affects income. Furthermore, internet access has a larger effect for small families. Finally, the impact of internet access does not change across regional disparities. Our findings indicate that improving rural internet infrastructure, reducing the cost of internet usage and guiding rural households to use the internet can help enhance internet access among rural households, subsequently increasing households’ income.