The effect of digital village pilot on farmers’ digital literacy: evidence from China

The digital divide in developing economies has shifted from a gap in access to a persistent deficit in capability, creating a low-level equilibrium among rural populations due to high learning costs and uncertain returns. By shifting the focus from the consequences of digital literacy to its institutional determinants, this paper exploits the 2020 launch of China’s Digital Village Pilot (DVP) as a quasi-natural experiment. Using longitudinal data from the China Family Panel Studies (CFPS) and a difference-in-differences strategy, we provide the first causal evidence that the DVP significantly enhances farmers’ digital literacy (FDL). Unpacking the black box, we demonstrate that the policy functions through three mechanisms. A supply-push effect lowers adoption thresholds via government-led access digitalization. A demand-pull effect incentivizes skill accumulation through market-driven industrial digitalization. A catch-up effect accelerates progress for lagging groups to bridge the usage gap. Crucially, the DVP fosters inclusive growth: it generates significant marginal benefits for older and less-educated farmers, thereby narrowing the intra-rural digital divide. Our findings suggest that coordinating infrastructure provision with industrial application is essential for breaking the capability trap in digital development.