Internet Development and Urban–Rural Consumption Inequality: Evidence from Chinese Cities

Jian Zhu, Zifang Li and Hui Wang ()
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Jian Zhu: School of Business, Xiangtan University, Xiangtan 411105, China
Zifang Li: School of Business, Xiangtan University, Xiangtan 411105, China
Hui Wang: School of Public Administration, Xiangtan University, Xiangtan 411105, China

Sustainability, 2023, vol. 15, issue 12, 1-15

Abstract: The impact of the digital dividends from Internet development on urban and rural residents is influenced by the existing urban–rural dual structure, resulting in heterogeneous and time-varying impacts on urban–rural consumption inequality. This study aims to investigate the nonlinear effect and mechanism of the Internet development on urban–rural consumption inequality in China. Using panel data from 263 prefecture-level cities between 2016 and 2019, we employ a two-way fixed effect model and a threshold model to examine this relationship. The findings of our study are as follows: (a) Internet development exhibits a U-shaped relationship with urban-rural consumption inequality. This U-shaped relationship is statistically consistent and stable in the whole country and in cities outside the five major urban agglomerations. (b) The level of urbanization acts as a threshold for the relationship between Internet development and urban–rural consumption inequality. (c) The influence of Internet development on urban–rural consumption inequality operates through its impact on income inequality and premature industrial structure. To effectively harness the positive impact of Internet development in reducing urban–rural consumption inequality, several key aspects deserve attention: acknowledging regional disparities and leveraging the Internet’s positive impact on urban–rural consumption inequality, considering the joint effects of Internet and urbanization developments, addressing digital divides among vulnerable groups, and promoting effective integration between the Internet and industry, particularly in manufacturing.

Keywords: internet development; urban–rural consumption inequality; urban–rural income inequality; premature industrial structure; urbanization (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2023
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