A Study On The Impact Of Rural Broadband Construction On Household Economy

At present,the income gap between urban and rural areas in China is still large,and the income level of rural residents is still relatively low.Increasing the income level of rural residents is one of the fundamental goals of the "rural vitalization" strategy.The central government has also formulated policy goals to eliminate absolute poverty by 2020.How to raise the income level of rural residents and reduce the incidence of rural poverty are important issues that are concerned by literature and policies.Another important aspect of the rural household economy is household consumption.Domestic consumption is insufficient in China,and the level of rural consumption is relatively low.Under the same income group,the average propensity to consume of rural residents is lower than that of urban households.Therefore,how to increase farmers' consumption is a significant question of theoretical and policy.Combining these two points,this paper analyzes household income and household consumption as the main explanatory variables.On the other hand,China's rapid economic development is closely related to a large amount of infrastructure investment.However,with the growth of China's infrastructure stock and the transition of economic development stages,two perspectives have been formed in terms of infrastructure construction.One view believes that China's infrastructure investment is currently excessive.Another view believes that China's per capita infrastructure stock is still low and further investment is needed.Taken as a whole,China's infrastructure investment not only has the problem of declining output efficiency of stocks,but also the problem of insufficient per capita stocks.To overcome these problems,the central government put forward the concept of new infrastructure at the Central Economic Work Conference in late 2018,and the first executive meeting of the State Council in 2020 put forward the need to "promote investment support policies on new infrastructure such as information networks." However,from the perspective of Chinese infrastructure investment data,the current share of new types of information network infrastructure is relatively low,so what is the contribution of new infrastructure to economic growth? What are the reasons for the need to increase investment in new infrastructure? This article evaluates its impact on rural economic growth from the perspective of broadband.In economics,information may be incomplete.Information asymmetry will cause a series of problems such as adverse selection,moral hazard,etc.The cost of obtaining information will be paid.Therefore,theoretically speaking,compared with traditional infrastructure,broadband can effectively promote information flow,reduce search costs,verification costs,and eliminate transportation costs.The impact on economic activities may be different from traditional infrastructure.From the perspective of income and expenditure of residents,the introduction and popularization of broadband can facilitate residents to use the Internet to search for job information,while helping residents understand relevant entrepreneurial information,and provide entrepreneurial platforms and reduce entrepreneurial costs.These characteristics help residents increase household income.Broadband also shortens the distance between residents and the market,reduces shopping costs,and may increase household consumption.Due to the characteristics of high investment,low returns,and long payback periods for broadband construction in rural areas in China,the economic benefits of the project itself are low.In order to alleviate the market failure in rural broadband construction,the Chinese government promotes rural broadband construction through financial subsidies,administrative orders and other means.The socioeconomic benefits of these investments outside the project need to be evaluated.In addition,related policies have provided a good policy shock for the study of this article,so the research in this article focuses on rural areas in China.This article focuses on the impact of broadband on rural residents' income,entrepreneurship,and consumption.This article first elaborates the relevant theories on economic growth,and then sorts out the literature on infrastructure,broadband and economic growth,and then analyzes and reviews the literature on farmers' income,entrepreneurship,and insufficient consumption in China.This article analyzes the current status of rural broadband development in China and finds that although China 's broadband penetration rate has been higher than the world average,household broadband penetration rates in rural areas in China are still relatively low.Immediately afterwards,for the broadband network to function,farmers need to have internet access equipment.Therefore,this article then analyzes the situation of farmers owning computers and mobile phones,and their main Internet applications.We find that the main Internet applications of rural residents in China are social contact,searching information,entertainment,purchasing products,selling products or services,which means that rural residents may obtain relevant information,engage in entrepreneurial activities or increase consumption through the Internet.In addition,we show the relationship between broadband penetration and farmers' income,entrepreneurship and consumption.In the study of broadband and farmer income,this article uses 2017 Chinese household financial data to find that an increase in broadband penetration can effectively increase farmer income.Specifically,for every 1 percentage point increase in community broadband penetration,the per capita income of farmers increases 1.36%,and broadband penetration can also help farmers escape poverty.Analysis of the specific mechanism shows that broadband promotion of entrepreneurship may be its main mechanism.Further analysis finds that broadband penetration has a role in increasing income for farmers at different income levels,but the incomes of low-income farmers and middle-income farmers are significantly lower than those of high-income farmers,which means that increasing broadband penetration will lead to farmers widening income gap.Because the income gap among farmers is also a reason for the current large income gap in China,the inequality caused by broadband penetration is worthy of attention.To alleviate possible endogenous problems,we use the average broadband penetration rate of other communities in the same district and county as an instrument variable for identification based on the connection characteristics of the broadband network.In the research on broadband and entrepreneurship,we analyze the impact of broadband construction on entrepreneurial behaviors in rural households with the help of policy shocks created by the Chinese government 's “broadband village”construction in rural areas of Sichuan and Yunnan provinces in 2014.Using the data from the China Household Financial Survey(CHFS)from 2013 and 2015,and using Sichuan and Yunnan rural areas as experimental groups,and geographically close Chongqing and Guizhou rural areas as control groups,we construct a double difference(DID)model.It is found that the construction of broadband increases the probability of rural entrepreneurship by 4.8 percentage points,which has strong economic significance.Analysis of alternative mechanisms shows that broadband construction has mainly promoted entrepreneurial behavior in offline wholesale and retail industries.This is because the logistics network in rural areas is not well developed,and the channels for online goods to the countryside are not smooth.Therefore,rural residents have the opportunity to open offline stores and sell popular online goods.They can also cooperate with e-commerce and open physical stores to provide relevant networks.Shopping services.In addition,this article finds that the promotion effect of broadband construction on entrepreneurship is significantly higher than road construction in the same period.We also conduct a series of robustness tests.The results of the pre-measurement of the policy show that before the implementation of the policy,there is no significant difference in the entrepreneurial behavior of the rural families between the experimental group and the control group.The results of counterfactual analysis show that virtual policy shocks do not produce policy effects similar to that of "broadband villages",which helps us to eliminate random interference.Because using broadband requires a certain level of knowledge or skills,families with higher levels of education or more young people are more impacted.In the study of broadband and consumption,we also use the “broadband rural”policy shock.The empirical results show that the construction of "broadband villages" significantly increases the proportion of rural households with mobile phones or computers by more than 10 percentage points,and significantly increases the per capita consumption of rural households by more than 10%.We conduct a series of robustness tests,and the conclusions all show that the construction of "broadband countryside" promotes rural household consumption.We then discuss the relationship between broadband construction and online and offline consumption.As the logistics network and e-commerce in rural areas of China are not developed before 2015,broadband construction mainly achieves the above effects by promoting offline consumption,which corresponds to the result of broadband promoting wholesale and retail entrepreneurship.The innovations of this paper are mainly reflected in the following points.First,the existing literature on China's broadband is concentrated at the macro level,and there are relatively few studies at the micro level and in rural areas.This article uses rural household survey data to analyze and expand related research.Second,the existing literature focuses on the economic growth effects of broadband,but pays less attention to the distribution effects of broadband.The research in this paper also shows that the broadband income increase effect on low-and middle-income farmers is significantly lower than that of high-income farmers,which means that in the process of broadband popularization,special attention should be paid to the policy tilt for low-and middle-income groups.We also study the poverty alleviation effect of broadband,which provides a theoretical basis for reducing poverty by means of broadband construction in rural areas.Third,more literature shows that infrastructure can effectively promote economic growth,but the existing literature on its specific impact mechanism is relatively inadequate.The research in this paper shows that the improvement of entrepreneurial activity is an important way for broadband to increase farmers' income.This also complements the existing literature.Fourth,in the related literature on infrastructure and economic growth,it is difficult to identify the causality between infrastructure and economic growth.We use difference-in-difference method for identification,which can alleviate endogenous problems and enrich the literature on infrastructure and broadband research.The policy recommendations in this article lie in the following points.First,in the context of new-type infrastructure construction,it is necessary to speed up the construction and popularization of rural broadband and further reduce the "digital divide" between urban and rural areas.On the one hand,the broadband network can be further extended to different residential areas,that is,natural villages,to increase the broadband accessibility of rural residents.On the other hand,the government should pay attention to the coordinated construction of wired fixed broadband with mobile broadband networks such as 3G,4G,and even 5G.For rural areas where broadband networks have been established,upgrades should be accelerated to form a network system with high network speed and stable operation.Second,the government should pay attention to the problem of widening income gap caused by broadband penetration,and strengthen internet skills training for rural residents.For low-income groups,their level of knowledge and skills is generally relatively low,which limits their possibility of getting more benefits from broadband development.Therefore,effective measures should be taken to help low-income people popularize knowledge of internet.Provide corresponding support policies for Taobao,Jingdong,Pinduoduo and other online business platforms,encourage them to further expand the rural market,help farmers to further connect with the consumer market,and increase farmers' income.Third,the government should improve the level of rural logistics and effectively reduce the cost of rural logistics.