Impact and Mechanism of Digital Inclusive Finance on the Urban–Rural Income Gap of China from a Spatial Econometric Perspective

• Published in: Sustainability Vol. 16; no. 7; p. 2641
• Main Authors: Mo, Yuan, Mu, Jing, Wang, Hui
• Format: Journal Article
• Language: English
• Published: Basel MDPI AG 01.04.2024
• Subjects: Cost control; Digital economy; Digitization; Econometric models; Economic growth; Financial inclusion; Financial services; Forecasts and trends; Geography; Hypotheses; Income distribution; Income inequality; Literature reviews; Mediation; Personal income; Poverty; Regions; Rural areas; China
• ISSN: 2071-1050; 2071-1050
• DOI: 10.3390/su16072641

With the rapid development of digital inclusive finance, whether it can lower the income inequality between urban and rural areas has been the focus of policy makers and researchers. Based on China’s 2011–2018 provincial panel data, this paper employs spatial econometric models and mediating-effect models to examine the impact of digital inclusive finance on the urban–rural income gap and its mechanism. The main findings are as follows: First, globally, the urban–rural income gap and digital inclusive finance each exhibit significant positive spatial correlation; locally, the income gap primarily exhibits spatial dependence in Central and Western China. Meanwhile, digital inclusive finance transitions from varied agglomeration patterns to exclusively H-H patterns in Eastern China. Second, digital inclusive finance notably reduces the urban–rural income gap, primarily attributed to its expanded breadth of coverage and digitization. Third, mechanism analysis indicates that digital inclusive finance can narrow the urban–rural income gap by increasing labor employment, resulting in higher farmer incomes, rather than through individual entrepreneurship and human capital investment. The findings of this study are crucial for improving digital inclusive financial development and adjusting urban–rural income distribution.