The critical role of digital infrastructure in inequality: New evidence from urban-rural consumption in China

This paper constructs a new digital infrastructure (DIF) measurement framework, combining mathematical modeling with empirical analysis to examine the impact mechanism of DIF on the urban-rural consumption inequality. The study shows that DIF plays a key role in curbing urban-rural consumption inequality, and the conclusions hold under exogenous shocks based on double machine learning (DML) methods. The dampening effect of DIF is more pronounced in cities with higher levels of transport and logistics infrastructure, especially in traditionally financially excluded and middle-income groups that have long been deprived of credit support. Mechanism analysis finds that DIF can curb urban-rural consumption inequality by alleviating urban-rural labor income gap and improving the scope of digital financial services. The deep-seated reason lies in its unbalanced upgrading effect on urban-rural consumption structure, which can further change traditional consumption pattern through platform economy, realize the interaction of urban and rural consumption resources, and thus effectively suppress urban-rural consumption inequality. This paper highlights inclusiveness and social welfare of DIF and inclusive finance, especially in rural areas and vulnerable groups. Digital villages should be actively promoted to break the urban-rural dual structure and achieve coordinated urban-rural development.