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Digital technology and regional income inequality: are better institutions the solution?

Antonietti, Roberto, Burlina, Chiara and Rodriguez-Pose, Andres ORCID: 0000-0002-8041-0856 (2025) Digital technology and regional income inequality: are better institutions the solution? Papers in Regional Science. p. 100079. ISSN 1056-8190 (In Press)

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Identification Number: 10.1016/j.pirs.2025.100079

Abstract

In this paper, we examine the effect of regional digital technology (including computing, communication equipment, software, and databases) on income distribution at the regional level. We aim to fill a gap in existing research by exploring the moderating role of formal and informal institutions —such as bonding and bridging social capital— in shaping how digital technology affects income inequality across European NUTS2 regions from 2006 to 2016. The results indicate that regions with greater access to digital technology are prone to higher levels of income inequality. However, this negative link is mitigated by strong formal and informal institutions, particularly through improved government effectiveness and bridging social capital. The findings are robust to potential endogeneity concerns, as demonstrated by the instrumental variable approach adopted.

Item Type: Article
Additional Information: © 2025 The Author(s)
Divisions: Geography & Environment
Subjects: H Social Sciences > HB Economic Theory
T Technology
G Geography. Anthropology. Recreation > G Geography (General)
H Social Sciences
JEL classification: R - Urban, Rural, and Regional Economics > R1 - General Regional Economics > R11 - Regional Economic Activity: Growth, Development, and Changes
O - Economic Development, Technological Change, and Growth > O3 - Technological Change; Research and Development > O33 - Technological Change: Choices and Consequences; Diffusion Processes
D - Microeconomics > D0 - General > D02 - Institutions: Design, Formation, and Operations
R - Urban, Rural, and Regional Economics > R5 - Regional Government Analysis > R58 - Regional Development Policy
Date Deposited: 24 Jan 2025 16:15
Last Modified: 24 Jan 2025 16:15
URI: http://eprints.lse.ac.uk/id/eprint/127062

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