Digital Literacy, Farmers’ Income Increase and Rural Internal Income Gap

Abstract

The digital economy has promoted the income growth of rural residents in China, but it has also widened the income gap within rural areas. The excessive income gap will lead to the uneven distribution of social resources and the decline of efficiency, thus threatening the sustainable development of the rural economy. This study utilizes the ‘Circumstances-Efforts’ analytical framework, the skill-biased technology change theory, and data from the China Family Panel Studies (CFPS) in 2018 to examine the impact of digital literacy on income growth among rural residents and the resulting income gap within rural areas. The findings indicate that digital literacy positively contributes to the income growth of rural residents. Moreover, the mechanism analysis reveals that improved access to digital devices and more effective information play a significant role in enhancing the income of rural residents. Furthermore, the analysis of income structures demonstrates that digital literacy has a greater impact on increasing wage income and agricultural income for both high-income and low-income rural residents. However, it is important to note that digital literacy also contributes to the widening income gap within rural areas, particularly impacting high-income rural residents.