Abstract
ABSTRACT This study investigates the link between innovation and income inequality in a panel dataset of 50 countries from 2014 to 2019, focusing on the moderating effects of digitalization and the mediating effect of economic growth. Simultaneous quantile regression and structural equation modeling are used for analysis. The results reveal a significant negative association between innovation and lower and middle-income inequality, while higher-income inequality is not significantly linked to innovation. Moreover, the study finds that digital infrastructure negatively moderates the relationship between innovation and income inequality, whereas the digital market has a positive moderating effect. Additionally, the indirect effect of innovation through economic growth is not found to significantly contribute to reducing income inequality. To address this issue, policymakers are urged to act in bridging the digital divide and tackling income inequality.
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