Internet use, income mobility and the expansion of the rural middle-income group: Evidence from China

The expansion of the rural middle-income group has been a global focus as it contributes to narrowing income gaps and reducing social inequality. Using data from the China Family Panel Studies (CFPS), this study examines the impact of Internet use on the mobility of rural low-income groups to the middle-income group from the perspective of income mobility. Controlling for household and provincial-level variables, the results of this study indicate that Internet use significantly promotes the mobility of rural low-income groups to the middle-income group, thereby facilitating the expansion of the rural middle-income group. These conclusions hold even after conducting endogeneity and robustness tests. Mechanism analysis shows that household entrepreneurship and non-agricultural employment are crucial pathways through which Internet use facilitates the mobility of rural low-income groups to middle-income groups. Further investigation shows that mobility from rural low-income to middle-income groups is more difficult in central-western regions and among those with lower levels of education. Internet use exacerbates the "digital divide" between different areas and education groups. In particular, the effect of Internet use in promoting mobility from rural low-income to middle-income groups is more pronounced in the eastern regions and among those with higher levels of education. The results of this study provide new evidence on the role of Internet use in expanding the rural middle-income group.