Digital dividend or digital divide? – Evidence from China

This paper examines the impact of the digital economy on the urban‒rural income gap. Based on Chinese provincial panel data from 2011 to 2022, this paper uses the entropy weight-TOPSIS method to construct a comprehensive index of the digital economy and explores the spatial spillover and heterogeneity of the impact of the digital economy on the urban‒rural income gap through the spatial Durbin model and partially linear functional-coefficient panel model. The results indicate that at the national level, the digital economy widens the urban‒rural income gap in the region and neighbouring regions. At the regional level, the digital economy contributes to widening the urban‒rural income gap in the eastern region and narrowing the gap in the western region. Furthermore, there is a nonlinear relationship between the digital economy and the urban‒rural income gap, and different dimensions of the digital economy have different impacts. This paper aims to provide insights and references for China and other developing countries to achieve integrated urban‒rural development with the support of the digital economy.