The impact of income inequality has attracted significant global attention as economies continue to develop. This study explores the potential influence of local culture, acting as an informal institution, in this complex process. Focusing on county-level regions within China’s Yangtze River Economic Belt from 2014 to 2021, our research examines how Confucian traditional culture, as an informal institution, shapes the relationship between the digital economy and the urban–rural income gap. Our findings indicate that while the early stages of digital economic development may initially widen the urban–rural income gap, subsequent progress is likely to reduce it. Notably, Confucian culture plays a positive role in narrowing this gap, particularly due to its inherent values of innovation and integrity. Further analysis reveals that this effect varies across the upstream and downstream regions of the Yangtze River Economic Belt, influenced by local economic conditions. Building upon these insights, we recommend enhancing Confucian cultural education and formulating region-specific strategies to promote the development of Confucian culture.
Jiang et al. (Fri,) studied this question.