Impact of developmental social policy on household welfare: Evidence from China’s comprehensive demonstration policy for e-commerce in rural areas

Developmental social policies are intended to achieve the dual objectives of economic growth and social equity through social investment; however, research on bridging the rural welfare gap and promoting equitable welfare distribution is limited. This study addresses this gap by examining the Comprehensive Demonstration Policy for E-commerce in Rural Areas (CDPER), which is a representative developmental social policy, and evaluating its impact on farmers’ welfare and income inequality. Using the CDPER as a quasi-natural experiment, we employ a staggered difference-in-differences approach with data from the China Household Finance Survey from 2013 to 2019. Key findings reveal that rural e-commerce development significantly increases household income while reducing income inequality, although farmers with limited education and those in western regions benefit less. Furthermore, the CDPER enhances farmers’ capacity, and increased digital and social capital promotes income and reduces income inequality. These findings emphasize the critical influence of developmental social policies on enhancing rural welfare and reducing inequality. The study has valuable implications for policymakers leveraging developmental social policies to achieve equitable and sustainable rural development.