Digital economy, education, human capital and urban–rural income disparity

Yulai Zhang, Liu Hainan, Fangfang Feng and Xuezhou Wu

Finance Research Letters, 2025, vol. 71, issue C

Abstract: Despite a growing body of research on digital economies, their impact on urban–rural income disparities, particularly how education and human capital moderate this relationship across regions, remains underexplored. This study addresses this gap using panel data from 31 Chinese provinces (2011–2022). Our fixed-effects regression results reveal that digital economic development significantly narrows urban–rural income gaps, although this effect varies regionally. The inequality-reducing effect is strongest in western regions (β = −0.452, p < 0.01) but weaker and insignificant in central (β = 0.211, p < 0.1) and eastern (β = 0.086) regions, respectively, suggesting digital transformation particularly benefits less developed areas. Human capital strongly enhances this effect, highlighting its crucial role in leveraging digital opportunities. Surprisingly, education investment slightly weakens the equalizing effect, indicating potential misalignment between current educational resources and digital skill demands. These findings suggest that policymakers should implement regionally differentiated strategies, prioritizing digital infrastructure and human capital enhancement in less developed regions while focusing on advanced digital capabilities in more developed areas.

Keywords: Digital transformation; Regional inequality; Educational development; Human capital formation; Economic convergence (search for similar items in EconPapers)
JEL-codes: I25 J24 O33 R11 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:71:y:2025:i:c:s1544612324014934

DOI: 10.1016/j.frl.2024.106464

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