Digital technology and regional income inequality: are better institutions the solution?

Roberto Antonietti, Chiara Burlina and Andres Rodriguez-Pose

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: In this paper, we examine the effect of regional digital technology (including computing, communication equipment, software, and databases) on income distribution at the regional level. We aim to fill a gap in existing research by exploring the moderating role of formal and informal institutions —such as bonding and bridging social capital— in shaping how digital technology affects income inequality across European NUTS2 regions from 2006 to 2016. The results indicate that regions with greater access to digital technology are prone to higher levels of income inequality. However, this negative link is mitigated by strong formal and informal institutions, particularly through improved government effectiveness and bridging social capital. The findings are robust to potential endogeneity concerns, as demonstrated by the instrumental variable approach adopted.

Keywords: digital technology; institutions; inequalities; European regions (search for similar items in EconPapers)
JEL-codes: D02 O33 R11 R58 (search for similar items in EconPapers)
Pages: 14 pages
Date: 2025-04-30
New Economics Papers: this item is included in nep-eec, nep-eur, nep-geo and nep-tid
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Published in Papers in Regional Science, 30, April, 2025, 104(2). ISSN: 1056-8190

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Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:127062

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