Digitalisation and income inequality in the UK: Evidence from three decades of technological transformation (1990–2024)

Introduction: The rapid introduction of artificial intelligence (AI) and digitalisation in workplaces has generated mixed reactions, especially in recent years as concerns about machines replacing or competing with human labour have grown. These concerns have led to partial adoption or outright rejection of digital technologies in some regions. In contrast, the United Kingdom has experienced a continuous rise in the adoption and use of digital tools in the workplace despite ongoing reservations. This study examines the relationship between digitalisation and income inequality in the UK, with a specific focus on assessing how digitalisation influences the distribution of income. Methods: The study applies the generalised method of moments (GMM) to evaluate the effect of digitalisation on income inequality using time-series data. Variables analysed include unemployment rate, institutional quality, digital adoption, and gross domestic product per capita. Results: Empirical findings reveal that the rising trend of digital adoption in the UK is significantly associated with a reduction in income inequality across the study period. The evidence suggests that increasing digitalisation has contributed to narrowing income disparities. Conclusions: The study concludes that digital transformation in the UK has played a crucial role in reducing income inequality. It recommends broadening digitalisation beyond productive sectors to include human resource management practices. Such integration can enhance institutional quality and reduce human bias in performance evaluations, thereby supporting greater income equity across the UK.