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Can ICT Diffusion Reduce Income Inequality for a Better Life? Evidence from Indonesian Provinces

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  • Kustanto, Andi

Abstract

This study examines the potential of ICT development to impact income inequality and economic development. While enhancing ICT infrastructure can broaden economic opportunities, it also has the potential to exacerbate wealth disparities among individuals with limited access. Utilizing panel data from 34 Indonesian provinces between 2012 and 2022, the study employs fixed effect and system GMM estimation methods to assess the relationship between ICT development and income inequality. The findings suggest that while ICT readiness tends to increase income inequality, the use of ICT and associated skills can mitigate it. Additionally, control variables such as wages and small/micro-enterprises show promise in reducing income inequality, whereas factors like life expectancy, population, and density tend to exacerbate it. The study concludes with implications for policymakers and stakeholders, emphasizing the importance of incorporating the social and economic benefits of ICT development into strategies aimed at reducing income inequality in Indonesia.

Suggested Citation

  • Kustanto, Andi, 2024. "Can ICT Diffusion Reduce Income Inequality for a Better Life? Evidence from Indonesian Provinces," Asian Journal of Applied Economics, Kasetsart University, Center for Applied Economics Research, vol. 31(1), January.
    • Handle: RePEc:ags:thkase:344194
    DOI: 10.22004/ag.econ.344194
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    Cited by:

    1. Andi Kustanto, 2024. "Bridging the Digital Gap: Analysing the Impact of ICT Diffusion on Income Inequality in Indonesia," Economic Thought journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 3, pages 323-352.

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