A study of the potential of information technology to improve economic inequality

Abstract

Abstract The information technology revolution carries a digital dividend and also breeds the mechanism of inequality, and the high-quality development of information technology is of great significance in improving the state of economic inequality. The article utilizes the relative deprivation index and Gini coefficient to quantify the level of economic inequality status and then establishes an evaluation index system combined with the entropy weight TOPSIS method to calculate the level of information technology development. Subsequently, the panel data of 31 provinces and cities in China from 2017 to 2022 are taken as the research object, and the corresponding variables are selected to construct the double-difference model and the threshold regression model. The direct and nonlinear effects of IT application on economic inequality improvement are analyzed through regression. The effect of the level of IT development on the relative deprivation index and Gini coefficient is significantly negative at the 1% level, with regression coefficients of -0.094 and -0.081, respectively, and the relative deprivation index and Gini coefficient have decreased by 187.88% and 117.65%, respectively, over the 13 years after the implementation of IT reform policies. The level of information technology development has two threshold values of 5.412 and 5.634 for the state of economic inequality, and either below the first threshold or above the second threshold significantly reduces the income gap arising from economic inequality. Information technology development can effectively alleviate the state of economic inequality, reduce the economic income gap, and lay the foundation for achieving common prosperity.