How Internet usage shapes the annual income of chinese urban-rural residents

Abstract

This study examines the influence of online learning frequency on income growth and its contribution to the urban-rural income disparity in China. The analysis employs data from the 2016 and 2018 China Family Panel Survey (CFPS), involving a sample of 5,922 individuals aged 16 to 60. Utilizing Ordinary Least Squares (OLS) regression, generalized ordered logit models, propensity score matching, and quantile regression, the findings indicate that daily online learning significantly elevates income by approximately 17.7% within the entire sample. The effects are notably more pronounced in urban areas, whereas the impact in rural areas remains negligible. Robustness checks, incorporating lagged dependent variables and income satisfaction as alternative outcomes, affirm these results. The study highlights heterogeneity between urban and rural regions, driven by disparities in digital infrastructure and labour market structures. The Oaxaca-Blinder decomposition, integrated with the Recentered Influence Function (RIF), reveals that differences in endowments—specifically higher education levels and daily online learning—account for between 75% and 130% of the income gap across various quantiles, with daily online learning contributing between 3.65% and 13.97% from the 25th to the 90th percentiles. Gender heterogeneity analysis indicates that rural women derive significantly greater benefits from online learning than men, with daily engagement resulting in a 36.7% increase in income. No significant regional differences in these returns are observed. These findings underscore the role of online learning in intensifying urban-rural income disparities, thereby supporting theories related to human capital development and ICT for Development (ICT4D). Policy recommendations emphasize the necessity of enhancing digital infrastructure in rural areas and customizing online education to meet local labour market needs to foster inclusive economic growth.