Does network infrastructure construction reduce urban–rural income inequality? Based on the “Broadband China” policy

Xitong Li, Peiming He, Honglin Liao, Jindan Liu and Litai Chen

Technological Forecasting and Social Change, 2024, vol. 205, issue C

Abstract: Network infrastructure is one of the most significant technological developments in recent decades, as well as a powerful boost for economic growth in both urban and rural area. However, whether improving network infrastructure reduces urban-rural income inequality (URII) remains uncertain in the previous literature. Considering that URII is an important research issue in the field of social change, it is worthwhile to investigate the causal relationship between network infrastructure and URII. Based on the exogenous shock from a quasi-natural experiment of “Broadband China” demonstration cities, this paper utilizes a time-varying Difference-in-Differences (Time-varying DID) model to identify the causal impact of the improvement of network infrastructure on URII in China. The results show that: (1) After controlling the impact of other commonly acknowledged factors, network infrastructure remains a significant factor in URII reduction. (2) The mechanism analysis confirms that the mediating effect of digital financial inclusion plays a vital role in the impact of network infrastructure on URII. (3) Further regional heterogeneity analysis reveals that the impact of network infrastructure on reducing URII also relies on region's characteristics, such as geographical location, traditional infrastructure level, and administrative level. This paper has figured out the causal relationship between network infrastructure and URII, thus inspiring policy-makers who aim to reduce inequality between urban and rural areas to commit to improving network infrastructure with an emphasis on digital financial inclusion mechanism and comprehensive consideration of regional heterogeneity.

Keywords: Network infrastructure construction; Urban–rural income inequality; Broadband China policy; Time–varying DID (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:tefoso:v:205:y:2024:i:c:s0040162524002828

DOI: 10.1016/j.techfore.2024.123486

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