IDEAS home Printed from https://ideas.repec.org/a/kap/ecopln/v58y2025i1d10.1007_s10644-024-09843-2.html
   My bibliography  Save this article

Global digital transformation: discovering the impact of digitalization on income inequality in OECD countries, the moderating role of globalization

Author

Listed:
  • Emmanuel Baffour Gyau

    (Jiangsu University)

  • Yaya Li

    (Jiangsu University)

  • Michael Appiah

    (Jiangsu University)

Abstract

Digitalization is transforming global economies by redefining the dynamics between technological advancement and globalization, significantly influencing income disparity and emphasizing the necessity of balancing inclusivity with the potential dangers of unregulated digital growth. Therefore, this study examines the impact of digitalization on income inequality across 31 OECD countries, utilizing panel data from 2004 to 2021 and the two-step system GMM methodology. The findings reveal that while digitalization initially reduces income inequality, it follows a U-shaped trajectory, indicating that unchecked digital growth may eventually exacerbate income disparities. Globalization, driven by trade openness and foreign direct investment, not only reduces income inequality but also moderates and enhances the reduction effect of digitalization on income inequality. Causality tests indicate bidirectional relationships between digitalization, globalization, and income inequality. Policymakers should adopt adaptive digital assessments, establish thresholds for digitalization, promote fintech-inclusive solutions, integrate trade and digital policies, and foster international agreements.

Suggested Citation

  • Emmanuel Baffour Gyau & Yaya Li & Michael Appiah, 2025. "Global digital transformation: discovering the impact of digitalization on income inequality in OECD countries, the moderating role of globalization," Economic Change and Restructuring, Springer, vol. 58(1), pages 1-37, February.
    • Handle: RePEc:kap:ecopln:v:58:y:2025:i:1:d:10.1007_s10644-024-09843-2
    DOI: 10.1007/s10644-024-09843-2
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s10644-024-09843-2
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.
    File URL: https://libkey.io/10.1007/s10644-024-09843-2?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Arellano, Manuel & Bover, Olympia, 1995. "Another look at the instrumental variable estimation of error-components models," Journal of Econometrics, Elsevier, vol. 68(1), pages 29-51, July.
    2. Kanungo, Rama Prasad & Gupta, Suraksha, 2021. "Financial inclusion through digitalisation of services for well-being," Technological Forecasting and Social Change, Elsevier, vol. 167(C).
    3. Anthony B. Atkinson & Thomas Piketty & Emmanuel Saez, 2011. "Top Incomes in the Long Run of History," Journal of Economic Literature, American Economic Association, vol. 49(1), pages 3-71, March.
    4. Hakan Öndes & Özlem Kızılgöl, 2024. "Financial Development and Income Inequality in Newly Industrialized Countries: Does Financial Kuznets Curve Exists?," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 15(4), pages 15618-15651, December.
    5. Grace Lordan, 2019. "People versus machines in the UK: Minimum wages, labor reallocation and automatable jobs," PLOS ONE, Public Library of Science, vol. 14(12), pages 1-16, December.
    6. Canh, Nguyen Phuc & Schinckus, Christophe & Thanh, Su Dinh & Hui Ling, Felicia Chong, 2020. "Effects of the internet, mobile, and land phones on income inequality and The Kuznets curve: Cross country analysis," Telecommunications Policy, Elsevier, vol. 44(10).
    7. Acheampong, Alex O. & Opoku, Eric Evans Osei, 2023. "Environmental degradation and economic growth: Investigating linkages and potential pathways," Energy Economics, Elsevier, vol. 123(C).
    8. Lantong Shao & Jiaqin Gong & Wenqing Fan & Zongyi Zhang & Meng Zhang, 2022. "Cost Comparison between Digital Management and Traditional Management of Cotton Fields—Evidence from Cotton Fields in Xinjiang, China," Agriculture, MDPI, vol. 12(8), pages 1-18, July.
    9. Daron Acemoglu & Pascual Restrepo, 2019. "Automation and New Tasks: How Technology Displaces and Reinstates Labor," Journal of Economic Perspectives, American Economic Association, vol. 33(2), pages 3-30, Spring.
    10. Westerlund, Joakim & Edgerton, David L., 2007. "A panel bootstrap cointegration test," Economics Letters, Elsevier, vol. 97(3), pages 185-190, December.
    11. M. Hashem Pesaran, 2007. "A simple panel unit root test in the presence of cross-section dependence," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 22(2), pages 265-312.
    12. Kim, Dong-Hyeon & Lin, Shu-Chin, 2023. "Income inequality, inflation and financial development," Journal of Empirical Finance, Elsevier, vol. 72(C), pages 468-487.
    13. Dumitrescu, Elena-Ivona & Hurlin, Christophe, 2012. "Testing for Granger non-causality in heterogeneous panels," Economic Modelling, Elsevier, vol. 29(4), pages 1450-1460.
    14. Toyo A. M. Dossou & Emmanuelle N. Kambaye & Mesfin W. Berhe & Simplice A. Asongu, 2023. "Moderating effect of ICT on the relationship between governance quality and income inequality in sub-Saharan Africa," Working Papers of the African Governance and Development Institute. 23/021, African Governance and Development Institute..
    15. Nur Carpa & Inmaculada Martínez-Zarzoso, 2022. "The impact of global value chain participation on income inequality," International Economics, CEPII research center, issue 169, pages 269-290.
    16. Ayesha Afzal & Saba Fazal Firdousi & Ayma Waqar & Minahil Awais, 2022. "The Influence of Internet Penetration on Poverty and Income Inequality," SAGE Open, , vol. 12(3), pages 21582440221, August.
    17. Li, Yaya & Zhang, Yun, 2023. "What is the role of green ICT innovation in lowering carbon emissions in China? A provincial-level analysis," Energy Economics, Elsevier, vol. 127(PA).
    18. T. S. Breusch & A. R. Pagan, 1980. "The Lagrange Multiplier Test and its Applications to Model Specification in Econometrics," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 47(1), pages 239-253.
    19. M. Hashem Pesaran & Aman Ullah & Takashi Yamagata, 2008. "A bias-adjusted LM test of error cross-section independence," Econometrics Journal, Royal Economic Society, vol. 11(1), pages 105-127, March.
    20. Rizwan Mushtaq & Catherine Bruneau, 2019. "Microfinance, financial inclusion and ICT: Implications for poverty and inequality," Post-Print hal-03452826, HAL.
    21. M. Hashem Pesaran, 2021. "General diagnostic tests for cross-sectional dependence in panels," Empirical Economics, Springer, vol. 60(1), pages 13-50, January.
    22. Skare, Marinko & Ozturk, Ilhan & Porada-Rochoń, Małgorzata & Stjepanovic, Sasa, 2024. "Energy as the new frontier: Dynamic panel data analysis revealing energy's transformative role in economic growth and technological progress," Technological Forecasting and Social Change, Elsevier, vol. 200(C).
    23. Hashem Pesaran, M. & Yamagata, Takashi, 2008. "Testing slope homogeneity in large panels," Journal of Econometrics, Elsevier, vol. 142(1), pages 50-93, January.
    24. Jauch, Sebastian & Watzka, Sebastian, 2016. "Financial development and income inequality: a panel data approach," Munich Reprints in Economics 43505, University of Munich, Department of Economics.
    25. Zi Hui Yin & Chang Hwan Choi, 2023. "Does digitalization contribute to lesser income inequality? Evidence from G20 countries," Information Technology for Development, Taylor & Francis Journals, vol. 29(1), pages 61-82, January.
    26. Zohra Dradra & Chokri Abdennadher, 2023. "Modeling the effects of renewable energy on sustainable development: evidence from simultaneous equations models," Economic Change and Restructuring, Springer, vol. 56(4), pages 2111-2128, August.
    27. Oduro, Stephen & De Nisco, Alessandro & Mainolfi, Giada, 2023. "Do digital technologies pay off? A meta-analytic review of the digital technologies/firm performance nexus," Technovation, Elsevier, vol. 128(C).
    28. Nam, Hyun-Jung & Frijns, Bart & Ryu, Doojin, 2024. "Trade openness and income inequality: The moderating role of institutional quality," Global Finance Journal, Elsevier, vol. 60(C).
    29. N. P. Hariram & K. B. Mekha & Vipinraj Suganthan & K. Sudhakar, 2023. "Sustainalism: An Integrated Socio-Economic-Environmental Model to Address Sustainable Development and Sustainability," Sustainability, MDPI, vol. 15(13), pages 1-37, July.
    30. Khadija Straaten & Rajneesh Narula & Elisa Giuliani, 2023. "The multinational enterprise, development, and the inequality of opportunities: A research agenda," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 54(9), pages 1623-1640, December.
    31. Keller, Wolfgang, 2010. "International Trade, Foreign Direct Investment, and Technology Spillovers," Handbook of the Economics of Innovation, in: Bronwyn H. Hall & Nathan Rosenberg (ed.), Handbook of the Economics of Innovation, edition 1, volume 2, chapter 0, pages 793-829, Elsevier.
    32. Kami Richmond & Russell E. Triplett, 2018. "ICT and income inequality: a cross-national perspective," International Review of Applied Economics, Taylor & Francis Journals, vol. 32(2), pages 195-214, March.
    33. Atif Awad, 2023. "Information and communication technologies role in alleviating poverty in Sub‐Saharan Africa: Impacts and transmission channels," Sustainable Development, John Wiley & Sons, Ltd., vol. 31(2), pages 1149-1165, April.
    34. Herzer, Dierk & Nunnenkamp, Peter, 2011. "FDI and income inequality: Evidence from Europe," Kiel Working Papers 1675, Kiel Institute for the World Economy (IfW Kiel).
    35. Li, Yaya & Zhang, Yuru & Pan, An & Han, Minchun & Veglianti, Eleonora, 2022. "Carbon emission reduction effects of industrial robot applications: Heterogeneity characteristics and influencing mechanisms," Technology in Society, Elsevier, vol. 70(C).
    36. Reza Ashraf Ganjoei & Hossein Akbarifard & Mashaallah Mashinchi & Sayyed Abdol Majid Jalaee Esfandabadi, 2021. "Applying of Fuzzy Nonlinear Regression to Investigate the Effect of Information and Communication Technology (ICT) on Income Distribution," Mathematical Problems in Engineering, Hindawi, vol. 2021, pages 1-11, June.
    37. Patrick Marie Nga Ndjobo & Nadège Ngah Otabela, 2023. "Can Income Inequality be Affected by the Interaction Between ICTs and Human Capital?: The Evidence from Developing Countries," Journal of Quantitative Economics, Springer;The Indian Econometric Society (TIES), vol. 21(1), pages 235-264, March.
    38. Antonelli, Cristiano & Tubiana, Matteo, 2023. "The rate and direction of technological change and wealth and income inequalities in advanced countries," Technological Forecasting and Social Change, Elsevier, vol. 191(C).
    39. Gupta, Suraksha & Kanungo, Rama Prasad, 2022. "Financial inclusion through digitalisation: Economic viability for the bottom of the pyramid (BOP) segment," Journal of Business Research, Elsevier, vol. 148(C), pages 262-276.
    40. Liena Kano & Eric W. K. Tsang & Henry Wai-chung Yeung, 2020. "Global value chains: A review of the multi-disciplinary literature," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 51(4), pages 577-622, June.
    41. Thorsten Beck & Asli Demirgüç-Kunt & Ross Levine, 2007. "Finance, inequality and the poor," Journal of Economic Growth, Springer, vol. 12(1), pages 27-49, March.
    42. Florian Dorn & Clemens Fuest & Niklas Potrafke, 2022. "Trade openness and income inequality: New empirical evidence," Economic Inquiry, Western Economic Association International, vol. 60(1), pages 202-223, January.
    43. Christian Hutter & Enzo Weber, 2023. "Labour market effects of wage inequality and skill-biased technical change," Applied Economics, Taylor & Francis Journals, vol. 55(27), pages 3063-3084, June.
    44. Yaya Li & Yuru Zhang & An Pan & Minchun Han & Eleonora Veglianti, 2022. "Carbon emission reduction effects of industrial robot applications: Heterogeneity characteristics and influencing mechanisms," Post-Print hal-04522085, HAL.
    45. Khadija Straaten & Rajneesh Narula & Elisa Giuliani, 2023. "Publisher Correction: The multinational enterprise, development, and the inequality of opportunities: A research agenda," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 54(9), pages 1641-1641, December.
    46. Quoc Hoi Le & Quynh Anh Do & Hong Chuong Pham & Thanh Duong Nguyen, 2021. "The Impact of Foreign Direct Investment on Income Inequality in Vietnam," Economies, MDPI, vol. 9(1), pages 1-15, March.
    47. Rinaldo Evangelista & Paolo Guerrieri & Valentina Meliciani, 2014. "The economic impact of digital technologies in Europe," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 23(8), pages 802-824, November.
    48. Shakib, Mohammed & Sohag, Kazi & Hassan, M. Kabir & Vasilyeva, Rogneda, 2023. "Finance and export diversifications Nexus in Russian regions: Role of trade globalization and regional potential," Emerging Markets Review, Elsevier, vol. 57(C).
    49. Clark Don P. & Highfill Jannett & de Oliveira Campino Jonas & Rehman Scheherazade S., 2011. "FDI, Technology Spillovers, Growth, and Income Inequality: A Selective Survey," Global Economy Journal, De Gruyter, vol. 11(2), pages 1-44, July.
    50. Cieślik, Andrzej & Goczek, Łukasz, 2018. "Control of corruption, international investment, and economic growth – Evidence from panel data," World Development, Elsevier, vol. 103(C), pages 323-335.
    51. Mushtaq, Rizwan & Bruneau, Catherine, 2019. "Microfinance, financial inclusion and ICT: Implications for poverty and inequality," Technology in Society, Elsevier, vol. 59(C).
    52. Manuel Arellano & Stephen Bond, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 58(2), pages 277-297.
    53. Bui Hoang Ngoc & Le Mai Hai, 2024. "Time-frequency nexus between tourism development, economic growth, human capital, and income inequality in Singapore," Applied Economics Letters, Taylor & Francis Journals, vol. 31(4), pages 259-264, February.
    54. Claessens, Stijn & Perotti, Enrico, 2007. "Finance and inequality: Channels and evidence," Journal of Comparative Economics, Elsevier, vol. 35(4), pages 748-773, December.
    55. Liena Kano & Eric W. K. Tsang & Henry Wai-chung Yeung, 2020. "Correction to: Global value chains: A review of the multi-disciplinary literature," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 51(8), pages 1353-1353, October.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Qamruzzaman, Md, 2022. "Nexus between renewable energy, foreign direct investment, and agro-productivity: The mediating role of carbon emission," Renewable Energy, Elsevier, vol. 184(C), pages 526-540.
    2. Njangang, Henri & Beleck, Alim & Tadadjeu, Sosson & Kamguia, Brice, 2022. "Do ICTs drive wealth inequality? Evidence from a dynamic panel analysis," Telecommunications Policy, Elsevier, vol. 46(2).
    3. Henri Njangang & Alim Beleck & Sosson Tadadjeu & Brice Kamguia, 2021. "Do ICTs drive wealth inequality? Evidence from a dynamic panel analysis," Working Papers of the African Governance and Development Institute. 21/057, African Governance and Development Institute..
    4. Appiah, Michael & Li, Mingxing & Sehrish, Saba & Abaji, Emad Eddin, 2023. "Investigating the connections between innovation, natural resource extraction, and environmental pollution in OECD nations; examining the role of capital formation," Resources Policy, Elsevier, vol. 81(C).
    5. Yilmaz Bayar & Marius Dan Gavriletea & Mirela Oana Pintea & Ioana Cristina Sechel, 2021. "Impact of Environment, Life Expectancy and Real GDP per Capita on Health Expenditures: Evidence from the EU Member States," IJERPH, MDPI, vol. 18(24), pages 1-14, December.
    6. Hossain, Mohammad Razib & Rao, Amar & Sharma, Gagan Deep & Dev, Dhairya & Kharbanda, Aeshna, 2024. "Empowering energy transition: Green innovation, digital finance, and the path to sustainable prosperity through green finance initiatives," Energy Economics, Elsevier, vol. 136(C).
    7. Yilmaz Bayar & Marius Dan Gavriletea, 2018. "Peace, terrorism and economic growth in Middle East and North African countries," Quality & Quantity: International Journal of Methodology, Springer, vol. 52(5), pages 2373-2392, September.
    8. Michael Appiah & Bright Akwasi Gyamfi & Tomiwa Sunday Adebayo & Festus Victor Bekun, 2023. "Do financial development, foreign direct investment, and economic growth enhance industrial development? Fresh evidence from Sub-Sahara African countries," Portuguese Economic Journal, Springer;Instituto Superior de Economia e Gestao, vol. 22(2), pages 203-227, May.
    9. Betul Gur, 2020. "The Effect of Foreign Trade on Innovation: The Case of Brics-T Countries," EconWorld Working Papers 20003, WERI-World Economic Research Institute, revised May 2020.
    10. BAYAR Yilmaz & AKYUZ Fatma & EREM Isil, 2017. "Openness And Financial Development In Central And Eastern European Countries," Studies in Business and Economics, Lucian Blaga University of Sibiu, Faculty of Economic Sciences, vol. 12(3), pages 5-16, December.
    11. Mahmut Unsal Sasmaz & Aysun Karamıklı & Ulas Akkucuk, 2021. "The relationship between renewable energy use and health expenditures in EU countries," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 22(7), pages 1129-1139, September.
    12. Mouhamadou Lamine DIAL, 2022. "Les effets de l’urbanisation et de l’industrialisation sur l’intensité énergétique dans la CEDEAO," Region et Developpement, Region et Developpement, LEAD, Universite du Sud - Toulon Var, vol. 56, pages 41-59.
    13. Hassan, Mahmoud & Kouzez, Marc & Lee, Ji-Yong & Msolli, Badreddine & Rjiba, Hatem, 2024. "Does increasing environmental policy stringency enhance renewable energy consumption in OECD countries?," Energy Economics, Elsevier, vol. 129(C).
    14. Tarik Dogru & Umit Bulut & Ercan Sirakaya-Turk, 2021. "Modeling tourism demand: Theoretical and empirical considerations for future research," Tourism Economics, , vol. 27(4), pages 874-889, June.
    15. Ioannis Kostakis & Sarantis Lolos, 2024. "Uncovering the impact of cultural heritage on economic growth: empirical evidence from Greek regions, 2000–2019," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 73(3), pages 1209-1239, October.
    16. Yilmaz Bayar & Rita Remeikienė & Gamze Sart, 2024. "ICT Penetration and Human Development: Empirical Evidence from the EU Transition Economies," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 15(1), pages 2422-2438, March.
    17. Henri Njangang & Alim Beleck & Sosson Tadadjeu & Brice Kamguia, 2021. "Do ICTs drive wealth inequality? Evidence from a dynamic panel analysis," Working Papers 21/057, European Xtramile Centre of African Studies (EXCAS).
    18. Ali, Adnan & Ramakrishnan, Suresh & Faisal, Faisal & Ghazi H Sulimany, Hamid & Bazhair, Ayman Hassan, 2022. "Stock market resource curse: The moderating role of institutional quality," Resources Policy, Elsevier, vol. 78(C).
    19. Hakan Öndes & Özlem Kızılgöl, 2024. "Financial Development and Income Inequality in Newly Industrialized Countries: Does Financial Kuznets Curve Exists?," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 15(4), pages 15618-15651, December.
    20. Ma, Yechi & Chen, Zhiguo & Shinwari, Riazullah & Khan, Zeeshan, 2021. "Financialization, globalization, and Dutch disease: Is Dutch disease exist for resources rich countries?," Resources Policy, Elsevier, vol. 72(C).

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:kap:ecopln:v:58:y:2025:i:1:d:10.1007_s10644-024-09843-2. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.