Internet use and income gaps between rural and urban residents in China

Using longitudinal survey data from the China Family Panel Studies, this study undertook a decomposition analysis to investigate the influences of differences in Internet access and return to Internet use on the income gap between rural and urban residents in China. Several major conclusions were drawn: First, there is a disparity in Internet access between rural and urban residents, with more Internet use among the latter. Second, while addressing the heterogeneity and other endogeneity problems simultaneously, the return to Internet use is higher for rural residents. Third, the disparity in Internet access widens the income gap, while differences in return to Internet use reduce income gap. Finally, the effects of Internet use on income gap differ by education and cohort, and the contribution values of return to Internet use on income gap are greater in the higher-educated group and younger generation than in their counterparts.