Development of the Digital Economy and Common Prosperity in Rural Areas:A Collaborative Perspective of E-commerce and Digital Finance
In the past decade,China has made remarkable achievements in poverty alleviation and successfully solved the absolute rural poverty problem.Currently,one of the challenges for Chinese society is the widening income inequal-ity,which has been a serious problem in rapid economic development.Furthermore,it runs counter to the developmental goals of promoting universal enjoyment of the fruits of development and narrowing the income gap.Based on this read-ing,the central government has set a series of policies to promote common prosperity,aiming to narrow the income gap.From statistics and relevant studies,it is evident that the income gap between urban and rural areas has been narrowing in recent years while that within rural areas shows a widening tendency.This drives us to investigate this phenomenon.Meanwhile,we also see that the digital economy has been the main engine for economic growth in recent years.E-commerce and digital finance,as the most frequently applied digital economic patterns for rural residents,have brought profound changes to the economic improvements of rural China.Although there is extensive discussion in relevant litera-ture regarding the effect of e-commerce and digital finance on rural development,there has been limited exploration of their synergistic effect in increasing farmers'income and narrowing the income gap within rural areas.This paper analyzes whether the synergy between e-commerce and digital finance promotes common prosperity in rural areas from both theoretical and empirical perspectives.Theoretically,we integrate the financing constraint model and the market search model,and derive the changes in farmers'production decisions and income under the simultaneous development of e-commerce and digital finance through the behavior of representative farmers.However,theoretical models cannot determine whether this effect widens the income gap or not,which is usually called the"digital divide".Empirically,we use the comprehensive leading project of e-commerce in parts of rural areas in 2014 and the Peking Uni-versity Digital Financial Inclusion Index to conduct our investigation,focusing on the interaction effect between the e-commerce policy and digital financial index.The empirical findings show that the synergy between these two signifi-cantly increases farmers'income,and more importantly,reduces the Gini coefficient,90th-10th quantile difference,and variance of farmers'disposable income.Further analysis reveals that the combined effect of e-commerce and digital fi-nance has gradually strengthened during the sample period,which narrows the income gap in rural areas.We also find that the interaction effect is stronger among Low-income counties,especially rural-labor-intensive,fiance-underdeveloped,machine-insufficient counties.Micro-data model at the family level has shown that the interaction effect promotes local employment of rural households,increases wage income and self-employment income,and reduces the gap in self-employment income.Compared with existing literature,this paper has the following findings.Firstly,we innovatively study the combined effect of e-commerce and digital finance on farmers'income and income inequality,focusing on whether the economic ef-fect of one digital technology will be strengthened or weakened by the other.Secondly,this study uses the Recentered In-fluence Function(RIF)regression method to investigate the impact of the development and collaboration of e-commerce and digital finance on the overall distribution of farmers'income.Finally,this paper uses the decomposition and heteroge-neity of counties and labor income to study the economic relationship and the changes in inequality,which has seldom been investigated in the relevant literature.The research in this paper is in line with the current direction of the Chinese government's promotion of rural revital-ization and common prosperity,and has certain enlightening significance for the way how the digital economy can change rural development.Based on our findings,to further improve the effect of the different patterns of the digital economy,we can strive for improvements in the following aspects:(1)improving the credit information sharing channels in key ar-eas of finance and leveraging e-commerce enterprises to alleviate the evaluation exclusion of rural finance;(2)leveraging financial inclusion to activate the essential resources of rural e-commerce production;and(3)paying more attention to less developed regions to increase the effect between e-commerce and digital finance on the economy.
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