Can Artificial Intelligence Narrow the Urban–Rural Income Inequality? Evidence from a Quasi-Natural Experiment in China

The accelerated advancement of artificial intelligence has triggered new discussions concerning the link between technological progress and the distribution of income. This study frames China’s National New Generation Artificial Intelligence Innovation and Development Pilot Zone (AIIDPZ) policy as a quasi-natural experiment, enabling us to identify the causal effect of AI promotion strategies on the urban–rural income inequality. Drawing on panel data from 257 Chinese cities over the period 2012–2023, we estimate the impacts using a multi-period difference-in-differences (DID) approach. The results demonstrate that the pilot zone policy significantly lowers the urban–rural income inequality index, by roughly 8.41%. The mechanism analysis reveals two primary pathways. First, the policy stimulates innovation in agricultural science and technology, which in turn boosts rural productivity. Second, it deepens the attention that the government directs toward artificial intelligence, contributing to a more balanced allocation of technological dividends between urban and rural areas. Heterogeneity tests further indicate that the inequality-reducing effects are especially notable in eastern regions, as well as in cities characterized by well-developed digital infrastructure and relatively weaker endowments of human capital. By offering empirical insight into how developing countries can reconcile distributional equity with the application of artificial intelligence, this study contributes to advancing the Sustainable Development Goals (SDGs).