The impact of technological changes on income inequality: the EU states case study

Abstract

In spite of economic growth, which led to the creation of millions of new jobs, income inequality has been growing sharply in most parts of the world. There is no doubt that inequality of income is the single greatest threat to social stability throughout the world. Development of technologies contributes to the increase of labour productivity, replacement of job positions by robots and automatic machines, which can further exacerbate social inequality. The aim of this paper is to determine how changes in technology affect the inequality of income in European countries. Based on the econometric apparatus, two periods are investigated: the first one, from 2006 to 2017 and the second one, from 2010 to 2017, that characterizes a new economic era after the global financial crisis. All countries were clustered, which made it possible to generalize their social and technological development. The novelty is that we considered the dichotomy and cointegration of two economic categories -income inequality and technological changes. Using a model that features biased heterogeneity, factor proportions, and labour market frictions, we obtained four quite sufficient results. (1) Central European countries and the UK have reached such a level of development and redistribution in the economy that a change in labour productivity is not significantly associated with any deepening of inequality in incomes. (2) Periphery countries, due to their significant dependence on larger economies and lack of

Assessing the Impact of ICT Sector on Sustainable Development in the European Union: An Empirical Analysis Using Panel Data

“…An analysis conducted in the European Union member states regarding the 2006-2017 time frame showed a positive impact of technological breakthroughs on social inequalities, detailing how it generates a more balanced distribution in Poland, Greece, Croatia, and Latvia, whereas in Bulgaria, Estonia, and Romania, the situation worsened [37].…”

Gravity model analysis of globalization process in transition economies

“…In particular, cheaper energy leads to an increase in output, which creates preconditions for further mechanization of production, and hence the replacement of people by robots. On the one hand, this trend leads to an increase in income inequality, but, on the other hand, the state has powerful tools to address these problems through fiscal mechanisms (Kharlamova, et al, 2018). The development of technologies can significantly reduce the cost of transporting products, the speed of delivery of goods, and therefore the obstacles that hinder the development of trade and economic globalization, are gradually decreasing.…”

Impact of Income Distribution on Social and Economic Well-Being of the State

“…Thus, scientists emphasize that the differentiation of incomes, especially when compared with existing proportions in neighbouring countries, becomes a significant migration driver, under the influence of which the demographic situation is becoming deteriorated and the perspectives of human capital reproduction are becoming more complicated in low-welfare countries, Ukraine being one of them [2]. At the same time, not only in developing countries, but also in developed ones, inequality is a fact recognised by scientists as a largely constraining social and economic progress and predetermines the imbalances of regional development [3][4][5]. In this case, one of the most famous works in the field of study of inequality and possibilities of its eradication, grounded by Doyle, M.W.…”