Can ICT Diffusion Reduce Income Inequality for a Better Life? Evidence from Indonesian Provinces

Andi Kustanto ()
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Andi Kustanto: Department of Economics, Universitas Sultan Ageng Tirtayasa, Indonesia, Postal: Jalan Raya Palka Km3, Sindangsari, Pabuaran, Serang, Banten 42163, Indonesia.

Asian Journal of Applied Economics/ Applied Economics Journal, 2024, vol. 31, issue 1, 1-36

Abstract: This study examines the potential of ICT development to impact income inequality and economic development. While enhancing ICT infrastructure can broaden economic opportunities, it also has the potential to exacerbate wealth disparities among individuals with limited access. Utilizing panel data from 34 Indonesian provinces between 2012 and 2022, the study employs fixed effect and system GMM estimation methods to assess the relationship between ICT development and income inequality. The findings suggest that while ICT readiness tends to increase income inequality, the use of ICT and associated skills can mitigate it. Additionally, control variables such as wages and small/micro-enterprises show promise in reducing income inequality, whereas factors like life expectancy, population, and density tend to exacerbate it. The study concludes with implications for policymakers and stakeholders, emphasizing the importance of incorporating the social and economic benefits of ICT development into strategies aimed at reducing income inequality in Indonesia.

Keywords: ICT readiness; ICT use; ICT skill; income inequality (search for similar items in EconPapers)
JEL-codes: D63 I24 O10 (search for similar items in EconPapers)
Date: 2024
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