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Internet usage and the income gap between self‐employed individuals and employees: Evidence from China

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  • Xinxin Ma
Abstract
Using longitudinal data from the China Family Panel Studies, we investigate the impact of Internet usage on the income gap between self‐employed individuals and employees in China, considering the sample selection bias and individual heterogeneity issues. We divided employment statuses into three types―small entrepreneur, own‐account worker, and employee. The findings reveal the following: First, the returns from Internet usage differ by employment type, which is lower for self‐employed individuals than that for employees. Second, the difference in Internet usage contributes to widening the income gap, whereas the difference in the returns from Internet usage to income contributes to narrowing it. Finally, Internet usage exerts a greater impact on the income gap between employees and small entrepreneurs than that between employees and own‐account workers. These empirical results suggest that the division of Internet access may exacerbate the segmentation of the formal and informal sectors in China.

Suggested Citation

  • Xinxin Ma, 2023. "Internet usage and the income gap between self‐employed individuals and employees: Evidence from China," Review of Development Economics, Wiley Blackwell, vol. 27(3), pages 1509-1536, August.
    • Handle: RePEc:bla:rdevec:v:27:y:2023:i:3:p:1509-1536
    DOI: 10.1111/rode.12969
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    References listed on IDEAS

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