Digital finance, capital-biased and labor-biased technical progress: Important grips for mitigating carbon emission inequality.

As an innovative financial model in the era of the digital economy, digital finance, with its inclusive characteristics, provides effective financial support for the realization of the carbon peak and carbon neutrality. To realize the "double carbon" goal, it is necessary not only to control the total amount and intensity of carbon emissions but also to consider the coordination and fairness of carbon emission reduction between regions. The existing literature has discussed the carbon reduction effect of digital finance, but few studies have focused on the impact and mechanism of digital finance on regional carbon emission inequality. On the basis of data from 287 prefecture-level cities in China from 2011 to 2021, this paper empirically examines the effect of digital finance on carbon emission inequality via a fixed effects model and convergence model. Digital finance not only reduces the Theil index of carbon emissions but also promotes the convergence of carbon emissions, which mitigates regional carbon emission inequality. The mechanism test shows that digital finance reduces the level of regional carbon emission inequality by promoting capital- and labor-biased technical progress in high-carbon emission regions. Heterogeneity analysis proves that digital finance can better exert its inhibitory effect on carbon emission inequality in regions with low financial agglomeration levels, weak industrial bases and small digital business scales. Further analysis indicates that digital finance can effectively reduce carbon emission inequality between regions, but the effect on carbon emission inequality within regions is not significant. The above findings provide a realistic reference for the formulation of differentiated digital finance policies to support carbon emission reduction. • Digital finance offers new opportunities to mitigate carbon emission inequality. • With the support of digital finance, regional carbon emissions show an apparent conditional convergence trend. • Digital finance alleviates carbon emission inequality by promoting capital-biased and labor-biased technical progress. • The impact of digital finance on carbon emission inequality varies regionally. [ABSTRACT FROM AUTHOR]