The Impact of the Digital Economy on Income Inequality

Abstract

This paper employs a univariate linear regression model to examine the impact of the digital economy on income inequality, using provincial panel data from 2010 to 2023 obtained from the National Bureau of Statistics of China. Robustness checks are conducted using the number of internet broadband access ports, and heterogeneity analyses are carried out from the perspectives of different time periods, regions, and the urban–rural dual structure. The main findings are as follows. First, the digital economy plays a mitigating role in income inequality. Second, following China’s proposal of the urban–rural integrated development strategy in 2017, the inequality-reducing effect of the digital economy has become more pronounced. Third, the mitigating effect of the digital economy is stronger in Northeast and Western China, while it is relatively weaker in Eastern and Central China. Fourth, the digital economy in urban areas has a stronger alleviating effect on income inequality. Based on these findings, this study further emphasizes that the government should strengthen digital economy infrastructure development, establish mechanisms for two-way data flows between urban and rural areas, leverage digital technologies to empower the transformation and upgrading of old industrial bases in Northeast China and the development of the green economy in Western China, and enhance digital awareness campaigns in rural areas as well as regulatory oversight of digital industries in urban areas.