The Impact Of The Digital Economy On Income Inequality

The problem of income inequality in China has become more and more prominent.In recent years,the income gap has shown an overall trend of expansion,and is hovering at a high level.According to the 2022 World Inequality Report,in the past 20 years,the world’s richest 10 percent accounted for 76 percent of the world’s wealth,nearly doubling the income gap with the poorest 50 percent of the population.Especially in recent years,the spread of COVID-19 has further exacerbated income inequality.The report to the 19 th National Congress of the CPC stated that "from 2020 to 2025,rural areas in the people’s living standards will be significantly increased,and we must ensure and improve people’s wellbeing in the course of development." Therefore,reducing the gap and alleviating income inequality is the inevitable requirement of China’s long-term goal in 2025,and it is our county’s urgent problem to be solved.China has entered a period when digital economy is the mainstream of current development,and it is also infiltrating into rural areas,affecting their life and production,and playing an important role in reducing income inequality between urban and rural areas.Therefore,an in-depth exploration of the impact of digital economy on income inequality is of great significance for abating relative poverty,reducing the sense of relative deprivation,improving people’s satisfaction,and building common prosperity.Since common prosperity is the common prosperity of all the people,it requires the benefit of every individual.Therefore,based on the CFPS data from 2012 to 2020 and the digital economy index at the city level,this thesis studies the impact of the development of digital economy on residents’ income inequality from a micro perspective,and mainly studies the following three questions:(1)Whether the development of digital economy has a mitigating effect on residents’ income inequality?(2)If there is a mitigation effect,what is the mechanism,including the effect and the transmission channel?(3)Whether the development of digital economy has a heterogeneous impact on different groups,and whether there will be a Matthew effect? Which group is more likely to be deprived of profit opportunities because of the development of the digital economy,and which group will improve their welfare level as a result.The research conclusions are following:(1)Digital economy alleviates residents’ income gap,which is still valid after robustness tests.(2)Mechanism analysis found that the digital economy realizes the effect of reducing household income inequality through the employment creation effect(including entrepreneurial effect and non-farm employment effect),social network effect and human capital accumulation effect.The former means that the digital economy can not only promote family entrepreneurship,but also increase non-farm employment,promote non-farm employment and increase the income of vulnerable groups;the social network effect means that the development of digital economy can enhance social interaction and effectively alleviate information asymmetry;and the human capital accumulation effect fundamentally provides the family power to eliminate poverty.(3)The heterogeneity analysis found that the digital economy had a more obvious role in rural and urban residents as well as residents in the eastern regions to alleviate income inequality,but had no significant effect on the urban-rural income gap and residents in the central and western regions.In addition,the digital economy has a better mitigation effect on households with middle and middle education levels and low and middle age groups,while the elderly over 60 are still excluded due to the lack of digital skills and literacy,and the digital economy has not really been universal.According to the conclusion of this thesis,the following policy recommendations are put forward: First,through the reasonable guidance of digital resources,narrow the digital divide,provide "digital soil" for the countryside.Second,we should increase public policy preferences,focus on improving human capital of residents,and actively cultivate digital talents.Third,adjust and reform the existing labor security system and promote a fair social income distribution system.