Abstract:The Third Plenary Session of the 20th CPC Central Committee explicitly proposed to foster new industries and new forms of business in rural areas and to expand county industries that benefit local people. As a matter of fact, most of the new rural industries at the current stage are rooted in the integrated development of the primary, secondary, and tertiary industries in rural areas under the background of digital economy. Therefore, this article investigates the people-enriching effect of new rural three-industry integration in the context of digital economy. Based on panel data of 30 provinces and cities in China from 2011 to 2021, the article measures the development of the digital economy and the income growth level of rural households, and portrays the development level of rural three-industry integration through the extension of the agricultural industry chain, the play of agriculture’s multifunction, and the integration with the service industry. On this basis, a two-way fixed effect model is used to systematically examine the effect of the digital economy on increasing the income of rural households and the mechanisms behind it. The study finds that, first, the development of rural digital economy significantly increases the income of rural households due to their participation in division of labor specialization and cooperation, and this conclusion still holds after a series of robustness tests. Second, in the context of digital economy, the new rural three-industry integration promotes the income increase of farm households through three channels of action: reuse of land resources, increase in non-farm employment opportunities, and farmers’ innovation and entrepreneurship. Finally, further analysis reveals that the higher the level of economic development, the more significant the effect of the digital economy is, but the effect of the digital economy and the wealth gap has an inverted “U” type relationship. The findings of the study provide a new understanding of the development of rural enrichment industry from the theoretical point of view, and provide empirical evidence for the realization of common prosperity in rural areas from the practical point of view. Accordingly, the following policy insights have been obtained: first, improve rural digital governance, consolidate and expand the income-generating effect of the digital economy for farmers on the basis of efforts to bridge the digital divide between urban and rural areas. Second, based on a more efficient specialized division of labor, incentivize the chain master enterprises, and make efforts to prolong the agricultural industry chain and refine the division of labor, while striving to contribute to the construction of a unified national market that includes the vast rural areas and unimpede domestic and international development. Third, provide top-level design at the right time, update the cultivation mechanism for innovation and entrepreneurship, and stimulate greater enthusiasm for innovation and entrepreneurship. Fourth, emphasize the heterogeneous characteristics of digital economic development in promoting farmers’ income growth, and strive to link digital economic development with farmers’ income growth at a higher level through the integration of industries on the basis of improving the construction of digital infrastructures in rural and underdeveloped areas.