Causal Link between Technological Innovation and Inequality Moderated by Public Spending, Manufacturing, Agricultural Employment, and Export Diversification

Abstract

Sustainable Development Goal 10 (SDG10) proposes the reduction of inequalities. This research highlights the importance of considering short- and long-term mechanisms for designing and applying policies to reduce income inequality. Specifically, we test for the causal link between technological innovation and income inequality using a balanced panel data sample from 73 countries worldwide. The inequality–technological innovation relationship is moderated by public spending, manufacturing, employment in agriculture, and export diversification. We use quantile regression techniques to test the impact of technological innovation on income inequality. The results offer robust empirical evidence that in most quantiles, the impact of technological innovation on inequality is positive. This result suggests that the dark side of technological innovation is that it increases income inequality. Furthermore, we find that government spending reduces inequality across all quantiles, while the effect of employment in agriculture and export diversification is inconclusive. Those responsible for social policy towards the achievement of SDG10 must include the advantages of public spending to reduce social disparities and promote social cohesion within countries.

Bridging the digital divide: the impact of technological innovation on income inequality and human interactions

“…innovative activities, increasing inequality by increasing the proportion of entrepreneurial income. Similarly, Tang et al (2022) proved that technological innovation and INE Granger cause each other in middle-to low-income countries, while there is unidirectional causality in other groups. According to Hatipoglu (2012), a decrease in income disparity results in more customers purchasing goods, which affects product revenue and output.…”

“…The pattern of rent sharing between workers and companies is also a potential source of high wages in the financial sector (Hm and Metzger, 2023). Therefore, the exclusive benefits of technical progress to specific institutions partially exacerbate the contradiction of INE (Tang et al 2022). Antonelli and Scellato (2019) Roles of economic growth, globalisation and export trade.…”

“…Despite the benefits of technological change to economic growth, there is a dark side of exacerbating INE. While numerous studies have demonstrated that technological innovation contributes to economic growth by boosting productivity and creating more occupations, it also widens the income gap (Antonelli and Scellato, 2019;Tang et al 2022). Biased technical innovation and technology spillovers are the two primary ways in which technological innovation affects INE.…”

Technological Change, Growth and Income Inequality

“…* Violante (2008) technological change can lead to an increase in the relative productivity of a certain type of work that creates a demand gap between skilled and unskilled workers. * Tang et al (2022) proved the direct and positive link between technological innovations and inequality for a balanced sample of panel data from 73 countries around the world.…”

Spillovers impact of institutional and economic factors in energy intensity

“…On the one hand, the efficient use of energy makes it possible to boost economic growth, and on the other hand, energy efficiency contributes to reducing environmental pollution, especially in countries where energy consumption is high (Chang, 2014). Technological changes are vital in achieving energy efficiency since technological quality partly conditions the amount of energy used (Tang et al, 2022; Wei et al, 2019). Most research investigates the relationship between energy intensity and economic growth.…”