Does digital financial inclusion alleviate poverty? This study investigates this question by integrating the Digital Financial Inclusion Index of Peking University with microdata from the China Family Panel Studies (CFPS) to examine how the expansion of digital financial inclusion affects household multidimensional poverty in China. Anchored in Amartya Sen ’ s capability approach and operationalized through the Alkire–Foster (A–F) framework, the study identifies multidimensional poverty across five key dimensions: income, health, education, insurance, and living standards. Probit models are employed to estimate how digital financial inclusion influences both the likelihood and structure of multidimensional poverty, while instrumental variable techniques are used to address potential endogeneity. Beyond the average effects, the study further explores the mechanisms through which digital financial inclusion contributes to poverty alleviation, focusing on three channels—promoting household consumption, increasing financial investment, and enhancing access to credit. The results reveal that digital financial inclusion significantly mitigates multidimensional poverty, particularly by improving income, living standards, and health outcomes, though its effects on education and insurance are limited. These findings underscore the transformative role of digital finance in fostering inclusive growth, suggesting that policies expanding digital financial infrastructure and literacy can amplify its poverty-reducing effects and advance equitable development.

This research employs the Alkire-Foster approach to measure multidimensional poverty between 2012 and 2020 in China, followed by examining the role of the three-pillar pension system in mitigating household multidimensional poverty. With the China Family Panel Studies data, our measurement uncovers the sustainable effects and mechanisms of household participation in the multi-pillar pension system on poverty mitigation. The results indicate that more participation in the pension system mitigates the probability of being trapped in multidimensional poverty. The findings reveal the significance of state social insurance, enterprise annuity, and individual commercial insurance. The mitigation effect of market-oriented pillars is achieved through more investment in and consumption for livelihood assets. Based upon the sustainable livelihoods framework, livelihood assets ameliorate household capabilities in human, natural, financial, and psychological capital against risks, shocks, and uncertainties. Our research contributes to the knowledge of how household participation in pension pillars sustainably mitigates multidimensional poverty through micro-level mechanisms and to the policy praxis of why a facilitating state is called for poverty mitigation from the perspective of new structural economics.