Does city smartness improve equality? Research on the impact of smart city construction on income inequality

Hailin Chen, Kun Deng and Friedrich Schneider ()

Pacific Economic Review, 2024, vol. 29, issue 3, 328-353

Abstract: Smart city construction is an essential practice in the effort to promote the digital transformation of society as a whole. Taking China's ‘National Smart City’ pilot project as a quasi‐natural experiment, this paper studies the income distribution effect of smart city construction by building a differences‐in‐differences model and using the data of China's prefecture‐level cities from 2008 to 2018. The results show that implementing China's ‘National Smart City’ pilot project has significantly reduced regional income inequality. However, this effect has heterogeneity. In regions with a higher level of economic development, human capital accumulation and R&D investment, the impact of smart city construction on reducing income inequality is stronger. In areas with a higher level of human capital accumulation, smart city construction can reduce income inequality. However, this effect is insignificant in areas with a lower level of human capital accumulation. Mechanisms tests show that smart city construction can reduce regional income inequality by creating more jobs, narrowing the digital divide and improving public service delivery. As stated above, this paper implies that accelerating the construction of smart cities and improving the digital and intelligence levels of the wider society is of great significance to reducing income inequality and building a more reasonable income distribution structure.

Date: 2024
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