Is e-commerce widening or narrowing the income distribution gap among Chinese households?

Purpose Although many researchers have studied the benefits of the applications of e-commerce, few have examined the relationship between e-commerce and its effects on household income distribution. This study explores the effects of e-commerce development on household income distribution in different regions of China. Design/methodology/approach This study uses a two-way fixed effect model for empirical analysis based on matched data from the E-commerce Development Index and the China Family Panel Studies database. The instrumental variables method is used for robustness testing. Findings The research findings indicate the following: (1) The development of e-commerce significantly reduces income inequality among Chinese households. For every 10% increase in e-commerce development, the income gap in China shrinks by 2.38%, with a reduction of 2.97 and 0.47% in urban and rural areas, respectively. (2) The reduction in income inequality due to e-commerce development is more pronounced in economically advanced regions. (3) The development of e-commerce in the eastern and western regions has a greater impact on reducing income inequality in urban than rural areas. In contrast, the opposite effect is observed in the central region. Originality/value This study contributes to existing research by examining the effects of e-commerce development on household income distribution. It has important theoretical and practical implications for issues such as narrowing the urban–rural gap.