The Nonlinear Relationship Between Technological Development and Income Inequality: Evidence from Dynamic Panel Model with Threshold Effect

Kostiulin Maksim ()
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Kostiulin Maksim: Yonsei University, Republic of Korea

Journal of Economic Development, 2024, vol. 49, issue 3, 33-61

Abstract: This study revisits the innovation-inequality nexus and tests the technological Kuznets curve hypothesis suggesting that technology can induce or reduce inequalities depending on the level of technological development. Applying a recently developed dynamic panel model with endogeneity and threshold effects to a panel of 72 countries, I find a significant U-shaped curvilinear relationship between innovation and income inequality which is robust to different measures of innovations and a different estimation technique. Furthermore, it was shown that achieving a certain level of technological development can change how economic growth and financial development affect income inequality.

Keywords: Nonlinearity; Dynamic Panel; Threshold Effects; Income Inequality; Innovation (search for similar items in EconPapers)
JEL-codes: D03 N30 O33 (search for similar items in EconPapers)
Date: 2024
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