Non-Linear Effect of Digital Economy on Urban & Rural Income Gap in Iran

Document Type : Research Paper

Author

Department of Economics, Faculty of Human Sciences, Ayatollah Borujerdi University, Borujerd, Iran.

10.22103/jdc.2024.22061.1416

Abstract

Objective: The present research aims to investigate the nonlinear effect of the digital economy on the income gap between urban and rural households in Iran from 1990 to 2021.
Method: The threshold regression approach is used to analyze the relationships between variables.
Results: The findings indicate that the digital economy leaves a nonlinear effect on the income gap between urban and rural households. In a way that, before reaching the threshold, the digital economy reduces the income gap between urban and rural households. However, after surpassing the threshold level of 48%, further development of the digital economy increases the income gap between urban and rural households.
Conclusion: In the preliminary stages of digital economy development, rural residents are able to use advanced technology to produce goods and services by using the digital economy, which in turn increases the efficiency of agricultural production and reduces the income gap between urban and rural households. However, after the digital economy surpasses the threshold level, the high digital literacy of urban people and the unequal development of digital economy infrastructure in urban and rural areas lead to greater growth of the industry and service sectors than the agricultural sector, which results in an increase in the income gap between urban and rural households. Therefore, it is necessary to take advantage of the growth of the digital economy to reduce the income gap between urban and rural households by developing digital economy infrastructure in rural areas and improving the digital literacy of villagers.

Keywords

Main Subjects

References

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History

  • Receive Date: 19 August 2023
  • Revise Date: 09 February 2024
  • Accept Date: 13 February 2024

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