Effects of the internet, mobile, and land phones on income inequality and the kuznets curve: cross country analysis

Abstract

This article investigates the determinants of the income inequality for a global sample including 87 economies between 2002 and 2014. Notably, the study examines the impacts of technology development through the internet usage, mobile usage and fixed telephone usage on income inequality. Furthermore, we control and further examine the non-linear impacts of institutional quality and human capital on income inequality. We find that the promotion of internet and mobile diffusion appear to be a way of reducing income inequality in the short and the long run. Nevertheless, we find an inverted-U shape relationship between the human capital and the institutional quality with the income inequality, but not for the case of income level. These findings are observed in our full sample and also in two sub-samples respectively composed by 46 low and middle income economies (LMEs) and 41 high income economies (HIEs). Beyond the empirical results supporting the Kuznets Curve hypothesis (KC) for the human capital and institutions, the major contributions of this article is to show that income inequality issue is actually not a matter of income only since diverse socio-economic and technological considerations have to be taken into account if policy makers want to reduce optimally these inequalities. This article offers an extended theoretical framework (inspired by the Kuznets curve hypothesis) to study income inequalities in a societal perspective in which telecommunications (internet, mobile and land phones) are integrated as key components. Our results confirm that internet and mobile use should actually be part of an active economic policy aiming at reducing income inequalities.