Effect of Entrepreneurship on Urban-Rural Income Inequality in China

Entrepreneurship is a two-edged sword, promoting economic mobility for some but potentially leading others into poverty. This research explores the effect of entrepreneurship on urban-rural income disparity in China, utilizing data collected in 265 Chinese cities from 2013 to 2019. Using a two-step System Generalized Method of Moments (GMM) for dynamic panel data, we found that entrepreneurship consistently reduces income inequality across various income levels in different digitalization environments. The findings underscore the significance of entrepreneurship in narrowing the disparity in income between urban and rural areas. Policies would be adaptable to the challenges and opportunities in different locations, with the goal of creating a favorable climate for the growth of both urban and rural economies.