The Digital Economy, the Urban–Rural Income Gap, and Sustainable Development—Evidence from China

Studying the effect of the digital economy on the urban–rural income gap is essential for promoting sustainable urban–rural development and achieving common prosperity. This study uses the Spatial Durbin Model to examine the effect of the digital economy on the urban–rural income gap based on panel data from 31 Chinese provincial regions from 2011 to 2023. There are four different types of income gaps: wage, operational, property, and transfer. The effects of the digital economy on different types of income gaps are examined. The findings demonstrate that the digital economy simultaneously widens the urban–rural income gap in both local and neighboring areas, with a greater detrimental effect in neighboring areas. The digital economy narrows urban–rural operational and property income gaps, but it widens the urban–rural wage income gap in both local and neighboring areas. The effect of the digital economy on the urban–rural transfer income gap has not yet emerged. The local and neighboring effects of the digital economy on the urban–rural income gap exhibit notable variability across regions.