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

Author

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  • Kustanto, Andi

    (Department of Economics, Universitas Sultan Ageng Tirtayasa, Indonesia)

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/ Applied Economics Journal, Kasetsart University, Faculty of Economics, Center for Applied Economic Research, vol. 31(1), pages 1-36, January-J.
    • Handle: RePEc:ris:apecjn:0092
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    More about this item

    Keywords

    ICT readiness; ICT use; ICT skill; income inequality;
    All these keywords.

    JEL classification:

    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • I24 - Health, Education, and Welfare - - Education - - - Education and Inequality
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General

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