The impact of digital economy on income inequality from the perspective of technological progress-biased transformation: evidence from China

Mao Wu (), Ying Ma (), Yu Gao () and Zhanhui Ji ()
Additional contact information
Mao Wu: Central University of Finance and Economics
Ying Ma: Southwestern University of Finance and Economics
Yu Gao: Northwest University
Zhanhui Ji: Northwest University

Empirical Economics, 2024, vol. 67, issue 2, No 7, 567-607

Abstract: Abstract We construct a dynamic theoretical analysis framework on how the development of digital economy affects income inequality, and then, we put forward competitive hypotheses about the technology-biased of digital economy. We select the provincial data of China from 2011 to 2019 as the research objects, and we use the CHFS and CFPS databases to measure the Gini coefficient as the indicator of income inequality. We adopt panel data fixed effect model, threshold model to verify which one of the competitive hypotheses is correct. The empirical study shows that the digital economy has a threshold effect on income inequality. The digital economy does not have a significant effect on income inequality at the early stage of development, increases income inequality after a certain level of development, and decreases income inequality when the digital economy is developed. This conclusion holds robustly after endogenous and robustness tests. From the macro perspective, the digital economy contributes to the increase in labor share, but only in regions with large numbers of high-skilled workers can reduce income equality. From the micro-perspective, the development of the digital economy and the increase in wage income jointly reduce income inequality. However, digital economy would reduce wage income when the digital economy is undeveloped, and increased wage income when the digital economy is developed. Therefore, the technological progress of digital economy would transform from bias to unbias. With the development of digital economy, the number of workers who can enjoy digital welfare will be more and more.

Keywords: Digital economy; Income inequality; Biased technological progress; Labor share; Wage income (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
http://link.springer.com/10.1007/s00181-024-02563-6 Abstract (text/html)
Access to the full text of the articles in this series is restricted.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spr:empeco:v:67:y:2024:i:2:d:10.1007_s00181-024-02563-6

Ordering information: This journal article can be ordered from
http://www.springer. ... rics/journal/181/PS2

DOI: 10.1007/s00181-024-02563-6

Access Statistics for this article

Empirical Economics is currently edited by Robert M. Kunst, Arthur H.O. van Soest, Bertrand Candelon, Subal C. Kumbhakar and Joakim Westerlund

More articles in Empirical Economics from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().