How does digital financial inclusion respond to the urban-rural income gap in counties: effect and mechanism test

Abstract Given that counties encompass approximately 90% of the agricultural population, enhancing agricultural income levels and bridging the urban-rural income (URI) gap constitute fundamental prerequisites for achieving common prosperity. Utilizing panel data from 817 Chinese counties (2014–2019), this study empirically investigates how digital financial inclusion (DFI) influences the URI gap at the county level. The results demonstrate that DFI not only contributes to reducing URI gap through agricultural incomes growth, but also generates significant spatial spillover effect. on neighboring regions. Mechanism analysis reveals that county-level entrepreneurial activity serves as a critical mediating mechanism through which DFI alleviates income disparities. Furthermore, rural development policies — particularly the E-commerce Pilot Program in Agricultural Areas — significantly amplify DFI’s equalizing effects. These findings provide actionable insights for optimizing DFI deployment to advance equitable development and common prosperity within China’s county-level socioeconomic framework.