Research on the Positive U-shaped Impact of China's Digital Economy Development on Urban-rural Income Gap and Countermeasures: Based on the Value Added of Provincial Digital Economy

Accurate measurement is a prerequisite for understanding the digital economy and conducting follow-up research. This article follows the practices of BEA and OECD and calculates the added value of China's provincial digital economy. Based on the calculation, we examine how development of the digital economy affects income gap between urban and rural areas. The results show that China's digital economy is developing rapidly with huge gaps between provinces, and the digital infrastructure is the foundation of digital economy development. The development of the digital economy has a U-shape effect on the income gap between urban and rural areas. Further mechanistic analysis showed that the development of the digital economy promotes the transfer of rural labor and delay the U-shape turning point. It also promotes the development of agricultural modernization, increases the income of farmers and narrows the income gap between urban and rural areas. Moreover, it can narrow the urban-rural income gap in adjacent areas through spatial spillover effects. This paper provides policy recommendations for promoting inclusive development of the digital economy.