Digital literacy and income inequality among farm households: evidence from China

Background The digital economy represents a pivotal pathway for mitigating rural income inequality and advancing common prosperity. As a prerequisite capability in the digital era, whether digital literacy can effectively alleviate imbalances in income distribution among rural households has emerged as a critical academic question within the context of rural revitalization. Methods Drawing on panel data from the China Family Panel Studies (CFPS) spanning 2014 to 2020, this study empirically examines the impact of digital literacy on rural income inequality. The Kakwani index was employed to measure income inequality, while the Two-Stage Least Squares (2SLS) method and the Extended Regression Model (ERM) were utilized to address potential endogeneity. Furthermore, heterogeneity analyses and mechanism tests were conducted. Results (1) Digital literacy exerts a significant inhibitory effect on rural income inequality, a finding that remains robust after controlling for endogeneity. (2) Heterogeneity analysis indicates distinct regional and demographic variations in the income-equalizing effect of digital literacy, with more pronounced impacts observed in central regions and among rural households with lower educational attainment. (3) Mechanism testing reveals that non-cognitive abilities significantly attenuate the inhibitory effect of digital literacy on income inequality; specifically, higher levels of non-cognitive abilities correspond to a diminished efficacy of digital literacy in narrowing the income gap. Conclusion Enhancing rural digital literacy and optimizing the allocation of new human capital constitute effective strategies for narrowing the rural income gap. Concurrently, it is essential to consider the moderating role of non-cognitive abilities. By implementing differentiated empowerment to achieve the inclusive sharing of digital dividends, this study offers theoretical support and policy references for advancing rural revitalization and common prosperity.