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Is internet penetration narrowing the rural–urban income inequality? A cross-regional study of China

Author

Listed:
  • Lei-Ju Qiu

    (Central University of Finance and Economics)

  • Shun-Bin Zhong

    (Central University of Finance and Economics)

  • Bao-Wen Sun

    (Central University of Finance and Economics)

  • Yu Song

    (University of Finance and Economics)

  • Xiao-Hua Chen

    (Central University of Finance and Economics)

Abstract

Internet penetration (NET) brings new opportunities as well as challenges to countries all over the world. It can narrow the rural–urban income inequality (RUI), because it increases the connections of rural areas to the urban areas from both the production side and consumption side. It can also enlarge the RUI, because the internet may be skill-biased. Meanwhile, income level and the RUI may lead to different local internet development. However, the relationship between NET and RUI remains unclarified. This study applies the method of bootstrap panel Granger causality to explore the causal relationship between NET and RUI. The estimation results show that the causal relationship between NET and RUI varies across different provinces and regions, which is in line with the hypothesis of the inverted U-shaped technological Kuznets curve (TKC). Specifically, the NET does Granger-cause RUI in two-fifths of China’s provinces, primarily in North China and East China, while RUI does not Granger-cause NET in China since the NET itself is largely dependent on government policies. Therefore, policymakers should develop fair internet development policies targeting the improvement of rural and urban income distribution.

Suggested Citation

  • Lei-Ju Qiu & Shun-Bin Zhong & Bao-Wen Sun & Yu Song & Xiao-Hua Chen, 2021. "Is internet penetration narrowing the rural–urban income inequality? A cross-regional study of China," Quality & Quantity: International Journal of Methodology, Springer, vol. 55(5), pages 1795-1814, October.
    • Handle: RePEc:spr:qualqt:v:55:y:2021:i:5:d:10.1007_s11135-020-01081-8
    DOI: 10.1007/s11135-020-01081-8
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    Cited by:

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    2. Shunbin Zhong & Mengding Li & Yihui Liu & Yun Bai, 2023. "Do Internet Development and Urbanization Foster Regional Economic Growth: Evidence from China’s Yangtze River Economic Belt," Sustainability, MDPI, vol. 15(12), pages 1-14, June.
    3. Haoyun Meng & Peidong Deng & Jinbo Zhang, 2022. "Nonlinear Impact of Circulation-Industry Intelligentization on the Urban–Rural Income Gap: Evidence from China," Sustainability, MDPI, vol. 14(15), pages 1-26, August.
    4. Xiaofan Zuo & Zhisheng Hong, 2022. "The Impact of Internet Use on Perception of the Poor–Rich Gap: Empirical Evidence from China," Sustainability, MDPI, vol. 14(6), pages 1-18, March.
    5. Zhengxin Li & Chengjun Liu & Xihui Chen, 2022. "Power of Digital Economy to Drive Urban-Rural Integration: Intrinsic Mechanism and Spatial Effect, from Perspective of Multidimensional Integration," IJERPH, MDPI, vol. 19(23), pages 1-20, November.

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    More about this item

    Keywords

    Internet penetration; Rural–urban income inequality; Technological kuznets curve; Bootstrap panel granger causality;
    All these keywords.

    JEL classification:

    • C1 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General
    • E2 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment
    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs

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