Digital service trade and income inequality: a panel data analysis for 100 countries

ABSTRACT

This paper investigates the impact of digital service trade on within-country income inequality based on a panel dataset covering 100 countries from 2005 to 2019. We find consistent evidence that digital service trade has a negative effect on income inequality in general. This effect is shown to be statistically significant in high-income and middle-income countries while it is insignificant in low-income countries.

KEYWORDS:

• Digital service trade
• digitization
• income inequality
• international trade

JEL CLASSIFICATION:

• F10
• F13
• F14
• D63

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

¹ Among them, low-income economies are all countries with per capita gross national income less than $1035 in 2019; low and middle-income (lower-middle income) economies are all countries with per capita gross national income between $1036 and $4045; middle and high-income economies (upper-middle income) are those countries with per capita gross national income between $4046 and $12,535; High-income economies are those countries with per capita gross national income more than $12,536. Source: The World Bank.

² There are many reasons why the primary completion rate can exceed 100%. The numerator may include late entrants and overage children who have repeated one or more grades of primary education as well as children who entered school early, while the denominator is the number of children at the entrance age for the last grade of primary education.

Additional information

Funding

This work was supported by the Campus EuroAsia Program under grant number CXXM20200051;Graduate Scientific Research Innovation Project of Guangdong University of Foreign Studies in 2021 under grant number 21GWCXXM－018; Guangdong Soft Science Project in 2020 ”Research on Methods and Implementation Path of International Scientific and Technological Cooperation in Guangdong, Hong Kong and Macao Bay Area” under grant number 2020A1010020041; Guangzhou Social Science Planning Project in 2019 ”Empirical Research on Guangzhou Science and Technology Finance under the Synergy Mechanism of Scientific and Technological Innovation and Technology Finance” under grant number 2019GZGJ59.