The Digital Economy, Factor Allocation and The Realization of Common Prosperity—An Empirical Study Based on Panel Data of 30 Provinces and Cities in China

The digital economy as a new economic form can both create prosperity and achieve sharing, which is in line with the concept of common prosperity, so how does the digital economy affect common prosperity? This paper adopts the panel data of 30 provinces (autonomous regions and municipalities) in China from 2013 to 2022, constructs the common prosperity index at the provincial level, incorporates the digital economy-capital and labour factor allocation-common prosperity into a unified analytical framework, and empirically examines the impact of the digital economy on the common prosperity and the mechanism of its action by using a two-way fixed model. The results of the study show that, firstly, the digital economy significantly promotes common prosperity. Second, the digital economy empowers the development of common prosperity by correcting the degree of mismatch of capital and labour resources. Third, there are regional differences in the promotion of the digital economy on the common prosperity, in which the central and western regions show obvious positive promotion, while the impact on the eastern region is relatively weak, there is a single threshold effect in the promotion of the digital economy on the common prosperity, in the case of the total amount of postal and telecommunication business is relatively low, the promotion of the digital economy on the common prosperity is significant, however, as the total amount of postal and telecommunication business reaches a However, as the total volume of postal and telecommunications business reaches a certain level, this positive promotion effect shows a decreasing effect. Accordingly, countermeasures are proposed to deepen the implementation of the digital economy strategy, promote the rational flow of capital and labour between regions and industries, improve the efficiency of resource allocation, and promote the realization of common prosperity.