IDEAS home Printed from https://ideas.repec.org/p/cpr/ceprdp/21296.html

Consumption Inequality in the Digital Age

Author

Listed:
  • Arvai, Kai
  • Mann, Katja

Abstract

This paper studies how digitalization affects consumption inequality. We assemble a novel dataset of digital technology in consumption, and establish that high-income households consume a larger share of digitally produced products than low-income households. We show that these products become relatively cheaper, which benefits rich households and contributes to consumption inequality. In a structural model with heterogeneous workers and non-homothetic preferences, we quantify the impact of digitalization on consumption inequality. The model demonstrates that a U-shaped income polarization translates into J-shaped welfare changes, as the price effect mutes income gains at the bottom while amplifying them at the top.

Suggested Citation

  • Arvai, Kai & Mann, Katja, 2026. "Consumption Inequality in the Digital Age," CEPR Discussion Papers 21296, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:21296
    as

    Download full text from publisher

    File URL: https://cepr.org/publications/DP21296
    Download Restriction: no
    ---><---

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;

    JEL classification:

    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models

    Statistics

    Access and download statistics

    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:cpr:ceprdp:21296. 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.

    We have no bibliographic references for this item. You can help adding them by using 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: CEPR (email available below). General contact details of provider: https://cepr.org/ .

    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.