The Influence of Internet Penetration on Poverty and Income Inequality

Abstract

Increased usage of technology is linked with poverty reduction, in existing literature but also rising income inequality due to microeconomic factors. This paper attempts to investigate how the technological penetration has impacted poverty levels and income inequality, at the global level and across different levels of income. Using data for 86 countries between 2005 and 2020, the paper employs a robust two step Systematic Generalized Moment Method (Sys-GMM) to assess the linear effect, non-linear effect, and synergy effect models. The results indicate that technological penetration has a different impact across countries, depending on the income levels. The positive association between technology and income inequality has repercussions for low-income countries, in particular. From a policy perspective, it is essential to consider macro- and micro-economic factors that affect the impact of technology penetration in low-income countries.