The Impact of Mobile Phone Adoption on Income Inequality

Income inequality could lead to weaker economic performance, and there is no consensus on how innovations could affect income inequality. In this paper, we use cross-country panel data to examine the relationship between telecommunications innovation, income inequality, and unemployment. We find different correlations between different levels of technological innovation and income inequality. Our study shows that the spread of 3G communication technologies has little impact on income inequality, while the spread of 4G communication technologies has significantly increased national income inequality. Moreover, the empirical results are robust to various measures of inequality. Finally, 3G communication technologies create far fewer new jobs than jobs displaced by automation, thus increasing unemployment levels. 4G communication technologies create more new jobs, thus reducing unemployment and increasing inequality