Does the Digital Economy Narrow or Widen the Urban-Rural Income Gap in China? Based on the Mediating Effect of Industrial Structure

The widening urban-rural income gap presents a significant challenge to the sustainable development of China's economy. Addressing this issue is crucial, especially in the context of the ongoing digital revolution, which has the potential to reshape economic dynamics. This study aims to provide a comprehensive analysis of how digital economy development affects the urban-rural income gap and to explore the underlying mechanisms. To achieve this, we constructed a comprehensive indicator system to evaluate the level of digital economy development, including four key dimensions: digital economy development carriers, digital industrialization, industrial digitalization, and the environment conducive to digital economy development. We utilized dynamic panel models and mediation effect models to examine the nonlinear relationship between digital economy development and the urban-rural income gap and to assess the mediating role of industrial structure. The analysis reveals a significant inverted U-shaped relationship between digital economy development and the urban-rural income gap: while the early stages of digital economy development tend to exacerbate the income gap, sustained development eventually leads to a reduction in this disparity. Additionally, the upgrading of industrial structure plays a significant mediating role in this process, whereas the optimization of industrial structure shows low statistical significance. These findings provide valuable insights for policymakers and stakeholders, helping them leverage advancements in digital economy to address income inequality issues. Future research should further explore the mechanisms of digital economy development in different regional contexts and assess its long-term impact on income distribution.