Whether the digital divide widens the income gap between China's regions?

Area of Science:

• Economics
• Information Science
• Regional Science

Background:

• Income inequality is a growing concern in China.
• The digital divide, encompassing access, use, and efficiency, is a potential driver of this inequality.
• Understanding the relationship between digital access and economic disparity is crucial for policy development.

Purpose of the Study:

• To quantify the impact of the digital divide on income inequality in Chinese prefecture-level cities.
• To investigate the regional heterogeneity of this impact.
• To identify the underlying mechanisms through which the digital divide affects income distribution.

Main Methods:

• Construction of a digital divide index based on access, use, and efficiency.
• Application of a two-stage spatial Difference-in-Differences (DID) combined with an Instrumental Variable (IV) model.
• Utilizing panel data from 280 prefecture-level cities in China (2014-2018).

Main Results:

• A 1-unit increase in the digital divide index is associated with a 0.134 unit widening of the income divide.
• The impact of the digital divide on income inequality is more pronounced in eastern China.
• The 'use divide' and 'efficiency divide' have a more significant impact on income inequality than the 'access divide'.

Conclusions:

• The digital divide is a significant contributor to income inequality in China.
• Policy interventions should focus on improving digital infrastructure, enhancing digital human capital, and optimizing industrial structure.
• Addressing the digital divide is essential for promoting equitable economic development.