Continental earthquakes produce both localized slip on faults and diffuse deformation in the surrounding medium, up to 1-2 kilometers from the faults. However, the origin of the diffuse deformation and its role in the rupture process are still debated. Here, we perform a joint inversion of InSAR, GNSS, and high-resolution optical correlation data and produce a detailed rupture model for the 2019 Ridgecrest, California, earthquake sequence. We show that the decrease of coseismic slip toward the ground surface observed in earthquake rupture models, also known as shallow slip deficit (SSD), directly correlates with the occurrence of diffuse deformation at the surface. Hence, we suggest that the SSD in earthquake source models can often be interpreted as a proxy for shallow diffuse inelastic deformation around faults. Revisiting earthquake source models for 25 continental earthquakes, we show that SSD and diffuse deformation are only significant for Mw<7.5 events.