Abstract:

[Objective] Digital rural construction has become an important strategy for promoting rural revitalization and breaking the long-standing urban-rural dual structure in China. Under the goals of common prosperity and agricultural modernization, sustained income growth for rural residents is a key policy concern. Existing studies have explored the economic effects of digital rural development, but several gaps remain. Most researches focus on a single outcome rather than jointly considering income growth and broader inclusive development. Many researches also rely on composite indices that may be endogenous to local conditions. In addition, the channels through which digital rural policies affect rural income have not been fully clarified. To address these issues, the National Digital Rural Pilot Policy was used as a quasi-natural experiment to examine whether digital rural construction raises rural residents' income, the transmission mechanisms of this effect and its effect on the urban–rural income gap. [Methods] Using the county-level panel data for 727 counties in China from 2014 to 2023, the 2020 launch of the National Digital Rural Pilot Program was treated as a quasi-natural experiment, and a difference-in-differences model was applied to identify the policy's effect on rural residents' per capita disposable income.The analysis controled for economic foundation, fiscal expenditure, financial development, population density, savings level, industrialization, service-sector development, and education. To test robustness, parallel trend tests, placebo tests, the exclusion of special samples, controls for other concurrent policies, and propensity score matching combined with DID estimation were conducted. Mechanism tests were used to examine whether the policy works through labor allocation optimization and enhanced entrepreneurial activity, while moderating effect models assessed whether county economic foundation, digital financial inclusion, and industrialization strengthen the income-enhancing effect. [Results and Discussions] The results showed that the National Digital Rural Pilot Policy significantly increased rural residents' income. After county and year fixed effects as well as other relevant factors were controlled for, the policy led to a significant increase in rural per capita disposable income, and this finding remained robust across a series of tests. Dynamic analysis showed no significant difference in pre-policy trends between pilot and non-pilot counties, while the positive effect emerged after policy implementation and strengthened over time, indicating a sustained and cumulative policy impact. Mechanism analysis identified two main channels through which the policy promoted income growth. First, digital rural construction improved labor allocation by fostering new forms of rural economic activity, such as digital agriculture and rural e-commerce, reducing labor market frictions, and improving the matching efficiency between labor and employment opportunities. Second, it enhanced entrepreneurial activity by lowering market entry and operating costs, increasing the vitality of agriculture-related business entities, and creating more opportunities for local business development and income generation. The income-enhancing effect was more pronounced in counties with a stronger economic foundation, higher levels of digital financial inclusion, and greater industrialization. However, although the policy significantly increased rural residents' income, it did not significantly reduce the urban-rural income gap, suggesting that absolute income growth did not necessarily lead to relative distributional convergence. [Conclusions] Digital rural construction is an effective pathway for increasing rural residents' income in China. By exploiting the National Digital Rural Pilot Policy as a quasi-natural experiment, this study provides more credible evidence on the income effects of digital rural development and clarifies its main transmission mechanisms. Future policy efforts should continue to advance digital rural construction while focusing on improving labor allocation, enhancing entrepreneurial activity, and strengthening county-level supporting conditions. Greater attention should also be paid to digitally disadvantaged areas and vulnerable rural groups in order to promote the inclusive sharing of digital dividends and foster more balanced urban–rural development.

Key words: digital rural construction, rural residents' income growth, urban-rural inclusive growth, difference-in-differences model