The Nexus between the Digital Service Economy and Intraregional Wage Inequalities

Abstract

The upsurge in wage inequalities is a common prediction in the literature analyzing the labor market outcomes of the diffusion of information and communication technologies and automation technologies. More controversial, instead, is the relationship between wage inequalities and digital technologies. This article addresses this issue on conceptual and empirical grounds. Specifically, the article elaborates on the distinction between digital technologies adoption and digital transformation and derives a conceptual typology of the different modes of digital service economy, that is, different types of digital transformation, each characterized by specific consequences in terms of intraregional wage inequalities. Empirically, based on an analysis of 164 European regions in the period 2009–16, the article documents that only regions characterized by the most pervasive types of digital service economy experience a rise of intraregional wage inequalities, a result that partly mitigates the automation anxiety frequently dominating the public and, sometimes, the scholarly debates.