Digital Divide and Income Inequality: A Spatial Analysis

A spatial quantile regression model, which can fully describe the distribution characteristics and spillover effects, is applied to explore the effect of digital divide on the income inequality. Firstly, the estimation results based on the full data set reveal that income inequality is positively spatial dependent across regions, and the Internet has a significantly positive effect on income inequality. Secondly, the entire data set is divided into two groups based on income, i.e., high income countries and low income countries. The estimation results of two groups are quite different. The income inequality were positively spatially correlated among neighbouring countries in high-income countries but negatively in low-income countries. On the other hand, the Internet usage exacerbate income disparity in low-income countries but improve income inequality in high-income countries. The results also show that increasing school enrollment can alleviate income gap especially in low-income countries.