Does the Digital Divide Hinder the Formation of the Middle Class? Evidence from Chinese Household Data

Using the China Family Panel Studies data, we construct a household digital divide index through factor analysis to analyze the impact of the digital divide on the formation of the middle class. The results indicate that the digital divide hinders the formation of the middle class. Mechanism analysis reveals that the digital divide adversely affects the formation of the middle class by inhibiting entrepreneurship, financial participation, and employment. Heterogeneity analysis highlights that the inhibiting effect of the digital divide on the middle class is more prominent in the eastern regions, urban areas, groups with lower educational levels, and older age groups.