Does Digitalization Widen Income Inequality? A Comparative Assessment for Advanced and Developing Economies

Nguyen Van Bon ()
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Nguyen Van Bon: PhD, Lecturer, Faculty of Finance – Banking, University of Finance – Marketing (UFM), 778 Nguyen Kiem St., Ward 4, Phu Nhuan Disrict, Ho Chi Minh City, Vietnam

South East European Journal of Economics and Business, 2022, vol. 17, issue 2, 154-171

Abstract: The paper raises two questions: (1) Does digitalization contribute to wealth and income inequality? (2) Does it affect inequality differently between advanced and developing economies? For the answers, the paper investigates the impact of digitalization on inequality for a balanced panel dataset of advanced economies and a balanced panel dataset of developing economies from 2002 through 2020. It applies the system-GMM and PMG estimators for estimation and robustness check. Some exciting results it provides. First, digitalization narrows inequality in developed economies and widens in developing economies. Second, the economic growth – income inequality relationship is U-shaped as real GDP per capita increases from low (developing economies) to high (advanced economies). Third, unemployment enhances inequality in two groups. The results note some necessary implications to develop digital technology and reduce income inequality in these economies.

Keywords: digitalization; income inequality; advanced economies; developing economies (search for similar items in EconPapers)
JEL-codes: C33 D31 J31 O33 (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:vrs:seejeb:v:17:y:2022:i:2:p:154-171:n:12

DOI: 10.2478/jeb-2022-0021

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