Impact of Internet Penetration on Income Inequality in Developing Asia: an Econometric Analysis

Abstract

The advent of technological progress has rapidly transformed the world in both positive and negative ways. Asia is one of the regions where technology and innovation have tangibly influenced lives and societies. Although the impact of technology is vast, previous studies have focused heavily on growth and productivity, with the effect on inequality underexplored. This paper examines the relationship between Internet penetration, measured by the number of Internet users per 100 persons, and income inequality using the Gini Index. While emphasizing the Asia Pacific, the econometric analysis used panel data from 191 countries around the world from 1990 to 2015. The empirical results suggested that the effects for developed and developing countries varied. Internet use in more developed countries was associated with a higher reduction in the Gini Index (lower inequality) compared to their developing counterparts. Internet penetration in the Asia Pacific did not improve inequality, although Internet use in developed Asia harmed income equality less than in developing Asia