The Impact of Digital Infrastructure on the Urban–Rural Income Gap: Empirical Evidence from 285 Cities in China

Digitalization has reshaped economic systems worldwide, yet its distributional consequences remain uneven and raise new challenges for sustainable development. China, where digital infrastructure has expanded rapidly, provides a critical setting to examine these effects and their implications for sustainable and inclusive growth. Using a balanced panel of 285 prefecture-level cities from 2007 to 2023, this study constructs a text-based index of digital infrastructure from government work reports and applies two-way fixed effects, instrumental variables, nonlinear models, placebo tests, heterogeneity analysis, and spatial Durbin models. The results show that digital infrastructure significantly widens the urban–rural income gap, with the effect becoming increasingly convex as digital development deepens. Two mechanisms drive this pattern: the concentration of innovation resources in urban areas, which crowds out rural R&D, and a modest degree of wage-structure polarization. Spatial spillovers also matter; digital development in neighboring cities partially offsets local inequality by enhancing interregional connectivity and knowledge diffusion. These findings provide city-level causal evidence on the unequal distributional impacts of digitalization in large emerging economies and highlight the need for sustainability-oriented digital governance, inclusive innovation systems, and regionally coordinated strategies to prevent digital infrastructure from reinforcing structural disparities. Strengthening these policies is essential for achieving more sustainable urban–rural integration in the digital era.