Global digital transformation: discovering the impact of digitalization on income inequality in OECD countries, the moderating role of globalization

Emmanuel Baffour Gyau (), Yaya Li () and Michael Appiah ()
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Emmanuel Baffour Gyau: Jiangsu University
Yaya Li: Jiangsu University
Michael Appiah: Jiangsu University

Economic Change and Restructuring, 2025, vol. 58, issue 1, No 6, 37 pages

Abstract: Abstract Digitalization is transforming global economies by redefining the dynamics between technological advancement and globalization, significantly influencing income disparity and emphasizing the necessity of balancing inclusivity with the potential dangers of unregulated digital growth. Therefore, this study examines the impact of digitalization on income inequality across 31 OECD countries, utilizing panel data from 2004 to 2021 and the two-step system GMM methodology. The findings reveal that while digitalization initially reduces income inequality, it follows a U-shaped trajectory, indicating that unchecked digital growth may eventually exacerbate income disparities. Globalization, driven by trade openness and foreign direct investment, not only reduces income inequality but also moderates and enhances the reduction effect of digitalization on income inequality. Causality tests indicate bidirectional relationships between digitalization, globalization, and income inequality. Policymakers should adopt adaptive digital assessments, establish thresholds for digitalization, promote fintech-inclusive solutions, integrate trade and digital policies, and foster international agreements.

Keywords: Digitalization; Income inequality; Globalization; OECD countries; Two-step system GMM (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1007/s10644-024-09843-2

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