Deciphering the digital divide: the heterogeneous and nonlinear influence of digital economy on urban-rural income inequality in China

Mengjiao Wang and Jianxu Liu

Applied Economics, 2025, vol. 57, issue 33, 4861-4881

Abstract: This study investigates the heterogeneous and nonlinear impact of digital economy on the urban-rural income disparities in 30 Chinese provinces from 2013 to 2020. The results from moderated multiple regressions and panel threshold regressions consistently indicate that digital economy generally widens China’s urban-rural inequality, but this widening effect diminishes as the digital economy progresses. Furthermore, the influence of digital economy varies depending on local socio-economic factors, including economic development, industrial structure, education level, government expenditure, and openness. Digital economy exerts a stronger influence on exacerbating the inequality in economically developed regions with higher education levels and greater openness, but it helps prevent the inequality from expanding through its interactions with secondary industry development and fiscal expenditure. These findings provide a reference for formulating target strategies in line with local development conditions to bridge the inequality engendered by the digital divide.

Date: 2025
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DOI: 10.1080/00036846.2024.2364101

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