Hidden Barriers to Competition: The Role of Digital Inequality

ABSTRACT This paper studies whether and how digital inequality affects individuals' willingness to compete (WTC), an important decision for labour market outcomes. Using a lab‐in‐the‐field experiment combined with detailed ICT‐usage survey data from Yunnan Province, China, we find three main results. First, reductions in digital inequality are associated with higher WTC, and this pattern is robust to alternative empirical approaches. Second, the effects differ across levels of digital inequality. Reductions in first‐level digital inequality, defined as gaining internet access, have limited effects, whereas reductions in second‐level digital inequality, captured by more effective ICT use, are consistently associated with higher WTC. Third, the effects are stronger among individuals with higher subjective beliefs about their relative performance and are more pronounced for men than for women. These results indicate that digital inequality acts as a barrier to competitive willingness and may contribute to persistent differences in individual development. Policies focused solely on expanding internet access are therefore likely to be insufficient. More effective digital use and targeted support for disadvantaged groups may matter more for reducing digital inequality.