Bridging the Divide: How E-commerce Mitigates Household Consumption Inequality in China

Abstract

This study develops a theoretical framework to analyze the impact of e-commerce development on consumption inequality. Drawing on micro-level data from the CHFS for 2015-2019 combined with large-scale data from e-commerce platforms, we conduct a comprehensive empirical analysis. The results indicate that e-commerce development significantly reduces consumption inequality at the household level, and this effect operates mainly via narrowing disparities in transaction costs and reducing income inequality. Specifically, households facing higher transaction costs increase their consumption owing to the enhanced convenience of e-commerce, while e-commerce also raises the income of low- and middle-income households, which in turn helps compress consumption disparities. Moreover, e-commerce development alleviates consumption disparities within and between cities, within both urban and rural households, and between urban and rural areas. It also promotes consumption mobility by helping low-consumption households move up to higher consumption tiers. These findings suggest that e-commerce development not only holds substantial potential for reducing micro- level household consumption inequality but also functions as a macro-level equalizing force that can narrow regional and urban-rural divides. Thus, e-commerce plays a crucial role in promoting consumption equity and supporting sustainable economic development by dynamically enhancing consumption mobility.