Pathway to prosperity or disparity?: The impact of regional IT penetration on common wealth

Abstract

In the context of the continuous integration and development of new-generation information technology (IT) and various industries, it is particularly important to pay attention to how the IT-affected income gap between urban and rural residents changes to affect the common wealth. This study conducts an empirical study based on 310 balanced panel data of inter-provincial China from 2012 to 2022 to investigate the specific impact mechanism of the increase in regional IT penetration on income disparity. The study finds that: 1) increased regional IT penetration widens the urban-rural and regional income gaps; 2) increased regional IT penetration widens the urban-rural and regional income gaps through the use of digital inclusive finance and deepening the digital divide, respectively. This study concludes that the government should improve the infrastructure of digital technology in rural areas as soon as possible, give full play to the inclusive and convenient role of digital inclusive finance, alleviate the digital divide between urban and rural areas, and reduce the ‘Matthew effect’, to facilitate sustainable development.