Abstract: Narrowing the income gap between urban and rural areas is one of the most important ways to promote common prosperity. At the same time, the world has entered the digital era, and the digital economy has had a significant impact on the income gap between urban and rural areas. This paper explores the theoretical logic and specific mechanism of the impact of digital economy on the urban-rural income gap. Using the data of 290 cities in China, this paper makes an empirical analysis by constructing the digital economy index system and using the fixed-effect model, generalized moment estimation, panel threshold model and other methods. The results show that there is a significant U-shaped relationship between digital economy and urban-rural income gap, which is well supported by robustness test and endogeneity test. Mechanism analysis shows that digital economy can narrow the urban-rural income gap by promoting the level of urbanization. Threshold regression analysis shows that the effect of digital economy development on urban-rural income gap is regulated by per capita GDP and the proportion of science and technology expenditure in GDP. Based on the theoretical analysis and empirical results, this paper puts forward some targeted policy suggestions to narrow the urban-rural income gap.

Key words: digital economy, urban-rural income gap, urban