The Impact of the Digital Economy on Income Distribution: Evidence from China

This study examines how digital economic development affects income distribution in China, using panel data from 31 provinces between 2011 and 2021. Employing a two-way fixed effects model and robustness tests, it finds that the digital economy significantly increases household income, primarily through wage growth. However, the effects are uneven across different groups. Urban residents benefit more than rural ones, widening the urban–rural income gap. Regionally, the eastern provinces experience greater income gains than central and western areas. Industry-wise, high-digital sectors such as mining, finance, and energy see stronger effects, while traditional sectors like agriculture and public services show limited impact. Non-state-owned enterprises also gain more than state-owned ones, due to their flexibility and adaptability. These findings suggest the digital economy brings both opportunities and challenges—enhancing income overall but also contributing to inequality. Policy recommendations include improving digital infrastructure in less-developed areas, supporting digital upskilling, and strengthening regulations to ensure inclusive and equitable digital development.