Abstract: Exploring the effects and mechanisms of digitalization in bridging the urban-rural income gap can enrich policy implications for achieving common prosperity. Theoretically, digitalization can stimulate innovation and entrepreneurship activities and promote industrial structural transformation, thus narrowing the urban-rural income gap. Empirically, this study measured the levels of digitalization and urban-rural income disparities across 230 municipal-level regions in China from 2011-2019, and conducted econometric analysis based on these measurements. The results indicate that the impact of digitalization on urban-rural income disparities exhibits a non-linear characteristic of first "promotion" and then "inhibition," which was robust after conducting tests for stability. Mechanism analysis shows that innovation and entrepreneurial activities and industrial structural transformation play a "connecting" role in the transmission between digitalization and urban-rural income disparities. Furthermore, threshold models and spatial models reveal non-linear increasing effects and spatial spillover effects of digitalization in bridging the urban-rural income gap. The study results provide new evidence and explanations for the effects and mechanisms of digitalization in bridging the urban-rural income gap.

Key words: digital economy, urban-rural income gap, activities of innovation and entrepreneurship, industrial structure transformation