Digital Economy, Factor Allocation Efficiency of Dual-Economy and Urban-Rural Income Gap

Abstract

The digital economy has significant economic structural transformation effects and income distribution effects. This article analyzed the impacts and mechanisms of digital economy development on the efficiency of dual-economic factor allocation and the urban–rural income gap from a theoretical perspective, empirically tested by using China’s provincial panel data from 2008 to 2017 and a bidirectional fixed effects model. It was found that the development of the digital economy has significantly improved the efficiency of factor allocation in the dual-economy, which has a significant improvement effect on the allocation efficiency of capital and labor. The development of the digital economy alleviates the problem of surplus labor factors and insufficient capital input in the agricultural sector by promoting nonagricultural employment and the flow of capital factors to the agricultural sector. The development of the digital economy can significantly reduce the urban–rural income gap by improving the efficiency of factor allocation in the dual-economy. The main contribution of this article is verifying that the flow of production factors triggered by the digital economy has a configuration efficiency improvement effect and further extending the economic structure effect of the digital economy to the field of distribution, examining the feasible path of optimizing the income distribution pattern of the digital economy.