The Impact of Internet Use on Income Inequality from Different Sources Among Farmers: Evidence from China

The rapid advancement of digital communication and information technologies has significantly influenced rural household income and income inequality. Based on a sample of 2216 farmers from the China Family Panel Studies (CFPS), this analysis combines Ordinary Least Squares (OLS) regression with Conditional Mixed Process (CMP) estimation to account for endogeneity, evaluating how internet adoption affects both income diversification and inequality patterns among Chinese farmers. The findings reveal three key insights: First, internet use significantly increases farmers’ household income while reducing overall income inequality. Second, the positive impact of internet use on total income is primarily driven by increases in wage and operating income, while the reduction in income inequality is associated with a more equitable distribution of these income sources. Third, human capital plays a moderating role, with high-human-capital farmers benefiting more from internet use in terms of income growth and inequality reduction. Based on these findings, this study suggests that policymakers should promote internet adoption to enhance farmers’ incomes and address income inequality, while paying attention to the varying effects across different human capital groups. These insights provide valuable policy implications for achieving common prosperity in developing countries and regions.