Two digital divides and income inequality: a global perspective

This research studies the association between two digital divides and income inequality around the globe. By pooling data from 97 countries between 2008 and 2016, we run a nonlinear regression model with fixed effects to analyze the impact of digitalization on income disparity and test the mediating and moderating effects of various macroeconomic variables. A U-shaped link is identified between digital divides and income inequality in upper- to middle-income countries, although an inverted U-shaped relationship stands in low-income and lower- to middle-income nations. Financial inclusion, technological advancement and unemployment are found to be significant mediators, while education is a significant moderator in changing the relationship between digitalization and income distribution. Our findings are timely and relevant that provides fresh policy perspectives for countries at different development phases to address income inequality in the process of digitalization.