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Digital technology, e-commerce, and economic inequality: The case of China

Author

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  • Liu, Nian
  • Qian, Yihe
  • Gu, Xinhua
  • Li, Guoqiang

Abstract

This paper examines economic inequality through digital facilitated e-commerce as a new perspective. Digital development is good for output production, which can attenuate regional income inequality in China. Falling search costs with e-commerce technological progress boost more online search for better price discounts. The resulting increase in spending propensities is higher in remoter, poorer, or smaller regions, so that consumption inequality declines more than income inequality as recently observed in China. This theoretical result is consistent with our empirical finding that China's ratio of income to consumption inequality rises significantly with rapid developments in its e-commerce. Additionally, this ratio is found to decrease under wider economic openness but increase with improved transportation conditions.

Suggested Citation

  • Liu, Nian & Qian, Yihe & Gu, Xinhua & Li, Guoqiang, 2024. "Digital technology, e-commerce, and economic inequality: The case of China," International Review of Economics & Finance, Elsevier, vol. 91(C), pages 259-271.
    • Handle: RePEc:eee:reveco:v:91:y:2024:i:c:p:259-271
    DOI: 10.1016/j.iref.2024.01.016
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    Cited by:

    1. Jinwei Lv & Xinyu Guo & Haiwei Jiang, 2025. "Rural E-Commerce and Income Inequality: Evidence from China," Sustainability, MDPI, vol. 17(10), pages 1-32, May.
    2. Bing He & Guoqi Nan & Da Xu & Jun Sun, 2025. "Bridging or widening? The impact of the Broadband China policy on urban-rural income inequality," Humanities and Social Sciences Communications, Palgrave Macmillan, vol. 12(1), pages 1-11, December.
    3. Armah, Abdul Karim & Li, Jinfa & Wei, Mengdi, 2025. "Effect of infrastructure and technological factors on slum online commerce and product delivery: A structural functionalism perspective," Journal of Retailing and Consumer Services, Elsevier, vol. 85(C).
    4. Li, Jie & Zhou, Wenwen & Li, Xiaohong & Wu, Yu, 2025. "Digital credit scoring and household consumption: Evidence from Sesame Credit in China," Emerging Markets Review, Elsevier, vol. 69(C).
    5. Chai, Shijun & Chen, Yang & Lim, King Yoong, 2026. "Digital divide and household portfolio investment efficiency: Evidence from China," Emerging Markets Review, Elsevier, vol. 70(C).
    6. Wang, Keyun & Xu, Fengmin & Wang, Shihao & Li, Benchu, 2024. "Data analysis technology and inequality in capital costs," Economics Letters, Elsevier, vol. 237(C).
    7. Gao, Yi & Yang, Jing & Zhao, Jingzhu & Peng, Haorong, 2025. "Impact of developmental social policy on household welfare: Evidence from China’s comprehensive demonstration policy for e-commerce in rural areas," Economic Analysis and Policy, Elsevier, vol. 86(C), pages 1820-1838.

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    Keywords

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    JEL classification:

    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • D33 - Microeconomics - - Distribution - - - Factor Income Distribution
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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