Is the internet penetration pro-poor? Evidence from a panel data analysis

Abstract

The impacts of internet use on income and poverty status are contentious despite extensive research efforts. This paper re-examines these influences using five-wave panel data extracted from the Vietnam Access to Resources Household Survey (VARHS). A two-step system called Generalized Methods of Moments (GMM) and Propensity Score Matching (PSM) is the primary metric for estimating internet-income and internet-poverty correlations. The analysis revealed that internet use assisted rural households, including the poor ones, in fostering their livelihoods in the 2008–2016 period: (1) internet access increased the average annual household income per capita by 4.5 million Vietnamese dongs, accounting for at least 17% of the overall income; (2) it decreased the probability of being poor by around 4%. This study suggests that the universalisation of the internet, along with improvements in digital literacy and digital applications provided for rural dwellers, particularly the needy, should be essential for poverty reduction programmes in the context of developing countries.