Digital Divide - the New Form of Social Inequality

Mariya Paskaleva ()
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Mariya Paskaleva: South-West University "Neofit Rilski", Faculty of Economics, Department of Finance and Accounting

Financial Navigator Journal (selected edition), 2025, issue 1, 121-131

Abstract: This study examines the relationship between digital divide metrics and income inequality across the 27 EU member states from 2015 to 2024, with particular attention to changes before, during, and after the COVID-19 pandemic. Using correlation analysis, OLS regression, and cluster analysis, we investigate how internet access, digital skills, digital economy development (DESI), ICT investment, and broadband prices affect the GINI coefficient. Our findings reveal that while inter-net access and digital skills demonstrate consistently negative relationships with inequality, broadband prices, ICT investment, and overall digital advancement (DESI) show positive associations with income inequality, especially during the post-pandemic period. These complex relationships suggest that digital transformation can both reduce and exacerbate inequality depending on implementation context. Cluster analysis reveals three distinct country groupings based on digital skills development and inequality dynamics, with some nations achieving notable inequality reduction alongside digital advancement while others experienced widening disparities despite similar digital progress. Predictive modeling indicates that a 10% improvement in digital indicators would reduce inequality in most EU countries, with Eastern European nations showing the greatest potential benefits, while seven countries would experience increased inequality despite digital improvements. This research demonstrates that the digital divide represents not merely a technological gap but a multifaceted social challenge requiring targeted policy interventions that prioritize equitable access, skills development, and complementary measures to ensure digital transformation benefits are shared across society.

Keywords: Digital Divide; GINI; EU; Digital Skills (search for similar items in EconPapers)
Date: 2025
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