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Digital economy, education, human capital and urban–rural income disparity

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  • Zhang, Yulai
  • Hainan, Liu
  • Feng, Fangfang
  • Wu, Xuezhou

Abstract

Despite a growing body of research on digital economies, their impact on urban–rural income disparities, particularly how education and human capital moderate this relationship across regions, remains underexplored. This study addresses this gap using panel data from 31 Chinese provinces (2011–2022). Our fixed-effects regression results reveal that digital economic development significantly narrows urban–rural income gaps, although this effect varies regionally. The inequality-reducing effect is strongest in western regions (β = −0.452, p < 0.01) but weaker and insignificant in central (β = 0.211, p < 0.1) and eastern (β = 0.086) regions, respectively, suggesting digital transformation particularly benefits less developed areas. Human capital strongly enhances this effect, highlighting its crucial role in leveraging digital opportunities. Surprisingly, education investment slightly weakens the equalizing effect, indicating potential misalignment between current educational resources and digital skill demands. These findings suggest that policymakers should implement regionally differentiated strategies, prioritizing digital infrastructure and human capital enhancement in less developed regions while focusing on advanced digital capabilities in more developed areas.

Suggested Citation

  • Zhang, Yulai & Hainan, Liu & Feng, Fangfang & Wu, Xuezhou, 2025. "Digital economy, education, human capital and urban–rural income disparity," Finance Research Letters, Elsevier, vol. 71(C).
    • Handle: RePEc:eee:finlet:v:71:y:2025:i:c:s1544612324014934
    DOI: 10.1016/j.frl.2024.106464
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    2. Su, Yajuan & Ren, Ruiying, 2025. "Can the development of rural E-commerce narrow the urban-rural income gap? Evidence from a quasi-natural experiment in national comprehensive demonstration counties for E-commerce," Finance Research Letters, Elsevier, vol. 85(PD).
    3. Zeng, Xuanye & Bai, Yunli & Wu, Jiaojiao & Qiu, Yutong & Zhang, Linxiu, 2026. "The impact of Vocational Skills Training of Public Employment Services on off-farm employment: Evidence from rural China," Journal of Asian Economics, Elsevier, vol. 102(C).
    4. Zhao, Qiao & Wang, Wangqing, 2025. "Digital transformation and rural financial development," Finance Research Letters, Elsevier, vol. 84(C).
    5. Shi, Jiawei, 2025. "Human capital mobility and corporate management cost," Finance Research Letters, Elsevier, vol. 82(C).

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    Keywords

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    JEL classification:

    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • I25 - Health, Education, and Welfare - - Education - - - Education and Economic Development
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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