Digital literacy, relative poverty, and common prosperity for rural households

Digital transformation has emerged as a crucial driver of economic development, yet its impact on rural China's socioeconomic landscape remains understudied. This research investigates how digital literacy influences common prosperity and relative poverty in rural China using comprehensive household-level data from the 2018 China Family Panel Studies (CFPS). Through robust econometric analysis, including multiple regression models and structural equation modeling, we examine both the direct effects of digital literacy on household economic outcomes and its indirect effects through the mediating channel of relative poverty. Our findings demonstrate that a one standard deviation increase in digital literacy scores corresponds to a 12.3 % reduction in relative poverty and a 15.7% increase in household income, with these effects amplified in China's western regions and among unmarried individuals. The results are robust to various model specifications and controls for potential endogeneity. By establishing the causal pathways between digital skills and economic well-being, this study provides empirical evidence for policymakers to design targeted interventions that leverage digital literacy as a tool for reducing rural-urban disparities. Our findings contribute to the growing literature on digital inclusion and suggest that investing in digital skills training could be a cost-effective strategy for promoting inclusive growth in rural China.