The Impact of Information and Communication Technologies on Income Inequality A comparison across country income groups

Abstract

This report aims to improve the understanding of the relationship between ICTs and income inequality by examining how this impact varies across different ICTs and country income levels. The literature review presents existing studies from global and regional perspectives that assess the direct link between ICTs and income inequality. Based on the literature synthesis, two hypotheses are formulated. To test these hypotheses, a multiple linear regression model is applied to a short, unbalanced panel of data comprising 1078 observations for 120 countries from 2007 to 2017. The panel data includes the Gini index as the dependent variable and seven explanatory variables, five of which are indicators of ICT adoption. Initially, the global link between ICT and income inequality is analyzed. Subsequently, the sample is divided into low-, middle-, and high-income country subsamples to investigate how the relationship varies across income groups. By comparing the estimation results with the existing literature, the two hypotheses are confirmed, indicating that ICTs alleviate income inequality globally and across country income levels, but that there are differences in terms of which ICTs have significant impacts. The findings presented in this report may offer insights for policymakers aiming to understand how ICTs impact income inequality.