1. School of Economics, Zhejiang Gongshang University, Hangzhou 310018, China; 2. School of Statistics and Mathematics, Zhejiang Gongshang University, Hangzhou 310018 , China; 3. Institute for Common Prosperity and Development, Zhejiang University, Hangzhou 310058, China
Abstract Based on the facts of China’s dual urban-rural economy, this paper constructs a two-sector production model empowered by digital technology. The model theoretically reveals that digital transformation can reduce both the economic and psychological costs of rural labor mobility, thereby promoting the reallocation of labor from rural households to the non-agricultural sector and driving income increases. Secondly, using an index-based method to comprehensively measure the level of digital transformation across regions in China, the findings show that an increase in the degree of digitalization significantly promotes the growth of per capita income in rural households. Furthermore, this income growth effect is more pronounced for households with higher levels of social capital. The results of the mechanism analysis further indicate that allocating labor to sectors such as transportation, storage, postal services, wholesale and retail is more conducive to income growth. Moreover, the income-increasing effect of employment within the same province is more significant than that of employment across regions. Based on the above conclusions, the paper proposes policy recommendations, including deepening the development of the digital economy, actively expanding employment opportunities for the transfer of rural labor and effectively protecting the legal rights and interests of rural labor working in urban areas.
2025, Vol. 42 
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