The effect of technology on income inequality. Implications of the digital divide: Evidence for OECD country members

Abstract

Income inequality continues to be one of the main problems to be solved in economies and access to technologies has become a transcendental element in reducing said inequalities. In this context, the objective of this research is to determine the effect of Information and Communication Technologies (ICTs), and the use of the Internet on income inequality for 20 member countries of the Organization for Economic Cooperation and Development. Economic (OECD) during 2004-2017. The data is obtained from the World Bank Development Indicators (2020). Panel data and Generalized Least Squares (GLS) models and dynamic models are used. The results obtained show that the increase in imports of ICTs and the use of the internet do not contribute to the reduction of income inequality, due to the negative effects of the existing digital divide in the economies analyzed. The economic policy could focus on the greater use of ICTs, in addition, the flexibility in tariffs would facilitate the obtaining of technological resources. Finally, the expansion of digital coverage would play a relevant role in reducing the existing digital divide.