The Impact of Digital Economy Development in Eastern and Western China on Income Inequality

Abstract

The development of the digital economy has become a new economic growth point, and its development will have an impact on income inequality in eastern and western China. Therefore, this study selects 83 cities in eastern and western China as the research objects, calculates the level of digital economy development and income inequality in eastern and western China, constructs a two-way fixed-effect model for empirical research, and conducts endogeneity test, robustness test, heterogeneity analysis and moderating effect analysis. The results show that from 2011 to 2022, the level of digital economy development in the east and west is improving, but the development of the east is better. Income inequality is declining in both regions year by year, but the situation is worse in the west. The development of China's digital economy will worsen income inequality between the east and west. The heterogeneity analysis shows that the development of the digital economy has a more obvious effect on the aggravation of income inequality in the eastern region, and the development of urban agglomerations also indicates that there is regional heterogeneity. The moderating effect analysis shows that the improvement of education level has a greater effect on alleviating income inequality in the western region. Based on this, it is proposed that the eastern part should balance efficiency and fairness, the western region should strengthen infrastructure construction and education, and the eastern and western regions should develop in a coordinated manner.