The Impact of Digital Economy Development on Income Inequality

The rapid expansion of the digital economy has raised critical questions about its role in shaping income distribution. Leveraging provincial panel data from China (2011–2022) and employing the Gini coefficient to measure income inequality, this study examines the nonlinear effects of digital economy development on income disparities. Our empirical analysis demonstrates a robust inverted U-shaped relationship: digital economy growth initially amplifies income inequality before eventually reducing it. This nonlinear pattern is statistically significant in eastern China but negligible in central and western regions. Notably, provinces outside the top 10 in digital economy rankings exhibit a steeper inverted U-shaped trajectory. Mechanism tests reveal that digital economy development exacerbates inequality through innovation capital agglomeration but mitigates disparities via two pathways: enhanced digital inclusive financial accessibility and improved industrial structure rationalization. These findings underscore the dual-edged nature of digital transformation. Policy implications emphasize the urgency of addressing primary and secondary digital divides, fostering interregional coordination, and establishing adaptive regulatory frameworks to ensure equitable digital growth.