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Does time-of-use electricity pricing narrow urban–rural income inequality? Evidence from China

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  • Wu, Benjian
  • Huang, Xing
  • Liang, Yi

Abstract

Using panel data from 259 Chinese prefecture-level cities over 2010–2024 and the Callaway–Sant'Anna multi-period difference-in-differences estimator, this study investigates whether China's nationwide time-of-use (TOU) electricity pricing reform narrows urban–rural income inequality. Results show that TOU significantly reduces urban–rural income inequality by an average of 13.6%, with effects emerging one year after implementation and persisting for at least four years. Mechanism analysis indicates that TOU affects inequality through two complementary channels: redistributing electricity expenditure from rural to urban households, and reducing agricultural production energy costs. Additionally, the policy's effectiveness exhibits substantial heterogeneity: it is more pronounced in regions with larger peak–valley tariff spreads and greater initial income inequality, and stronger in export-oriented cities and agriculture-dominated cities.

Suggested Citation

  • Wu, Benjian & Huang, Xing & Liang, Yi, 2026. "Does time-of-use electricity pricing narrow urban–rural income inequality? Evidence from China," Economic Analysis and Policy, Elsevier, vol. 91(C), pages 15-29.
    • Handle: RePEc:eee:ecanpo:v:91:y:2026:i:c:p:15-29
    DOI: 10.1016/j.eap.2026.03.006
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