The U-shaped Impact of Digital Government Development on Income Inequality:Global Evidence
We systematically estimate the causal effects of digital government development on income inequality.Initially,we elaborate on the impact of digital government on income inequality through a conceptual quantitative model.Specifically,the initial introduction of digital government enhances the standardization and transparency of public service application processes,reducing the costs for firms to access public services.The gap among firms in their ability to apply for public services is then narrowed,reducing the inequality in firm profitability.Nonetheless,with the progressive maturation of digital government functionalities,some firms may encounter limitations in fully leveraging online public services due to variances in scale,geographical location,human capital,and other determinants,leading to the phenomenon known as the"digital divide,"thus widening income disparities.Using data from 158 economies worldwide from 2007 to 2019,we first employ fixed effects regressions to explore the correlation between digital government development and income inequality.However,due to the inherent endogeneity of digital government construction and its close association with the overall economic development level,the fixed effects regressions suffer from bias.To address the endogeneities,we further construct instrumental variables for digital government development by interacting with the average historical birth rates between 1950 and 1955 and time trend.Our two stage least squares results then show that the influence of digital government follows a U-shaped pattern.To be specific,digital government widens income inequality in the top 50％of countries but reduces it in the remaining 50％.We aim to delve deeper into the impact of digital government on income inequality both before and after government redistribution as mechanism explorations.We utilize the Gini coefficient based on pre-tax and pre-transfer income data from the SWIID database to gauge income inequality prior to government redistribution.Comparative analysis of the regression outcomes from this exercise with our baseline results suggests the redistribution does not affect the U-pattern.Our conclusions are highly robust.After altering variable measurements,modifying model specifications,and incorporating additional control variables,the observed U-shaped pattern in the impact of digital government development on income inequality remains unchanged.To mitigate the potential widening of income disparity in China posed by digital government development,we propose two policy recommendations.First,during the construction of digital government,Chinese government should focus on expanding the coverage of digital technologies and enhancing the precision of public services,enabling as many people as possible to access government services through digital platforms,thus achieving equalization of public services and bridging the digital divide effectively.Second,Chinese government should further broaden and deepen the application of digital technologies in the income redistribution process.Our study underscores three significant contributions.First,we extend the research on the influence of information and communication technology on income inequality from the perspective of digital government.Second,we identify the heterogeneous impact of digital government on income distribution at different stages of development.Thirdly,we provide credible empirical evidence concerning the influence of digital government on inclusive income growth through cross-national data analysis.Our findings offer insights into the systemic impact of digital government on income inequality,providing new policy pathways for promoting common prosperity in China.
common prosperitydigital governmentincome inequalitydigital divide
NETL
NSTL
万方数据
