Does ICT diffusion validate skill-biased technological change hypothesis? Evidence from the post-Soviet countries

Abstract

This study scrutinizes the impact of ICT diffusion on decomposed measures of income inequality in post-Soviet countries. We apply the Cross-Sectional Autoregressive Distributed Lags (CS-ARDL) approach to examine the dynamics of our panel time series data from 1991 to 2019. Empirical evidence suggests that ICT diffusion is negatively associated with the income of the top segments (the top 1 % and 10 %) of the population in the long term, while its impact is insignificant in the short term. Moreover, the ICT diffusion de facto (policy-implementation spectrum) primarily promotes the income share of the bottom class, probably by providing new market opportunities. The spread of ICT, in terms of policy decisions, leads to a notable decrease in the income proportion held by the top 10 % of earners, exhibiting the most significant level of responsiveness. Furthermore, our findings infer that government expenditure can also play a crucial role in reducing income inequality by decreasing the income portion of the top segment. The implications of our findings have direct relevance for policymakers in formulating effective strategies regarding ICT diffusion-income inequality nexus.