Inequality in the digital economy: The impact of artificial intelligence on income gap—an empirical analysis based on county-level data from China

Zhang W., Han J., IŞIK C., Song J., Liu X., Dembińska I., ...More

Cities, vol.166, 2025 (SSCI, Scopus) identifier identifier

  • Publication Type: Article / Article
  • Volume: 166
  • Publication Date: 2025
  • Doi Number: 10.1016/j.cities.2025.106280
  • Journal Name: Cities
  • Journal Indexes: Social Sciences Citation Index (SSCI), Scopus, Academic Search Premier, International Bibliography of Social Sciences, Periodicals Index Online, Avery, Business Source Elite, Business Source Premier, Environment Index, Index Islamicus, PAIS International, Political Science Complete, Public Affairs Index, Social services abstracts, Sociological abstracts, Worldwide Political Science Abstracts
  • Keywords: Artificial intelligence, Employment, Income gap, Vocational skill
  • Open Archive Collection: Article
  • Azerbaijan State University of Economics (UNEC) Affiliated: No

Abstract

In the digital economy era, artificial intelligence (AI) is significantly reshaping global production and lifestyles. However, its impact on income distribution remains a topic of debate. This study uses county-level panel data from China and a fixed-effects model to explore AI's impact on the urban-rural income gap. The findings show that AI development worsens the income gap, with this result confirmed by robustness tests. Heterogeneity analysis indicates a stronger effect in regions with better digital infrastructure, more local government support, and advanced industrial technology. Further analysis identifies vocational skills and employment as key transmission channels through which AI influences the income gap. Additionally, digital finance inclusive plays a positive moderating role by effectively mitigating the widening income gap caused by AI. This study not only contributes new theoretical insights and empirical evidence to the discourse on AI and income inequality but also provides valuable policy implications within the context of digital economic transformation.