The information technology and relative poverty: An analysis based on the micro data of China family panel studies

Abstract

Drawing on the Information Effect, this study uses data from the China Family Panel Studies (CFPS) to investigate the impact of information technology (IT) on relative poverty - defined as falling below the median income - among urban and rural Chinese households, and to elucidate the underlying mechanisms driving these effects. Our results show that IT usage can help alleviate relative poverty in both urban and rural households. After addressing potential endogeneity using instrumental variables (IV), the effect still significant. The effect of IT is particularly pronounced in households with strong learning motivation, high learning capabilities, frequency internet use for learning, and frequency online social interactions. Additionally, the effect is most notable in male-headed households and those located in areas with better-developed transportation infrastructure. Further analysis indicates that IT influences relative poverty by promoting employment, access to credit, risk-taking, and entrepreneurship of urban and rural households. This implies that IT adoption can help aid families in making employment and credit decisions, increase their risk tolerance, and encourage entrepreneurial activities, thus helping to alleviate relative poverty. This study provides new evidence on the mechanisms through which IT impacts relative poverty and supports expanding IT's role in fostering economic development and reducing relative poverty. Overall, this study provides fresh empirical insights into how IT influences relative poverty and advocates for further expanding IT's role in promoting economic and social development.