Impact of E-commerce Development on Income Inequality: Evidence from rural China based on cross-county panel data

Author Name MA Xinxin (Hosei University) / KOMATSU Sho (Asian Growth Research Institute)
Creation Date/NO. June 2023 23-E-044
Research Project Studies on Transformations of International Systems and their Impact on Japan's Mid- & Long-term Competitiveness
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Information and communications technology (ICT) is rapidly developing worldwide. Some studies argue that ICT increases income inequality in developed countries; however, evidence on the relationship between progress in ICT and income inequality in developing countries is scarce. Using an original cross-county panel data from 2011 to 2018, we investigated the impact of e-commerce development on income inequality in rural China while considering endogeneity issues. We found that the effect of e-commerce on income inequality differed by region: e-commerce development could expand income inequality in developed counties, while reducing it in less-developed ones; the total effect of e-commerce on the income inequality was insignificant. Additionally, this effect was greater in counties with a higher level of agricultural modernization. Furthermore, the decomposition results indicated that differences in e-commerce accessibility and income return of e-commerce usage contributed to widening the income inequality between developed and less-developed rural counties.