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Digital Divide and Income Inequality: A Spatial Analysis

Chun-Hung A. Lin (), Ho-Shan Lin () and Ching-Po Hsu ()
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Chun-Hung A. Lin: Department of Industrial Economics, Tamkang University 151 Ying-Chuan Road, Tamsui, New Taipei City 25137, TAIWAN
Ho-Shan Lin: Taipei Water Department, Taipei City Government 131 Changxing Street, Taipei 10672, TAIWAN
Ching-Po Hsu: Taiwan Institute of Economic Research 7F, 16-8 Dehuei Street, Taipei 10461, TAIWAN

Review of Economics & Finance, 2017, vol. 8, 31-43

Abstract: A spatial quantile regression model, which can fully describe the distribution characteristics and spillover effects, is applied to explore the effect of digital divide on the income inequality. Firstly, the estimation results based on the full data set reveal that income inequality is positively spatial dependent across regions, and the Internet has a significantly positive effect on income inequality. Secondly, the entire data set is divided into two groups based on income, i.e., high income countries and low income countries. The estimation results of two groups are quite different. The income inequality were positively spatially correlated among neighbouring countries in high-income countries but negatively in low-income countries. On the other hand, the Internet usage exacerbate income disparity in low-income countries but improve income inequality in high-income countries. The results also show that increasing school enrollment can alleviate income gap especially in low-income countries.

Keywords: Digital divide; Income inequality; Spatial econometrics; Quantile regression; Spillover effect (search for similar items in EconPapers)
JEL-codes: O33 D31 R12 (search for similar items in EconPapers)
Date: 2017
Note: The authors would like to thank the anonymous referees for their insightful comments and suggestions. The usual disclaimer applies.
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Handle: RePEc:bap:journl:170203