Examining how internet use and non-farm employment affect rural households’ income gap? Evidence from China

Abstract

The objective of this study is to assess the effect of Internet use on the income disparity between rural households and to determine how Internet usage can be used to reduce this income gap. We use the Recentered Influence Function Regression (RIF) and data from the China Family Panel Studies (CFPS) conducted by the China Social Science Survey (CSSS) center at Peking University to make the results of regression estimation more reliable. The results reveal that Internet use can make rural households’ income gap shrink considerably, and that the degree of non-farm employment among rural families has a mediating effect between Internet use and the income disparity of farm households. In addition, the Eastern region experiences a stronger mitigating effect from Internet use, whereas ethnic minorities find out no such mitigating effect. This study expands the scope of income disparity theory, provides new ideas for the construction of digital villages, and identifies new empirical evidence and decision-making grounds for improving the livelihoods of rural households and narrowing the income gap between rural households.