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The relationship between innovation and income inequality under the Technological Kuznets curve hypothesis: Evidence from the ARDL model for South Korea

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This paper investigates potential nonlinear effects of technological innovation on income inequality in South Korea over the period from 1986 to 2020. For this purpose, I test the Technological Kuznets curve (TKC) hypothesis based on the Autoregressive Distributed Lag modelling approach to cointegration. In the short-run, this study finds that positive changes in technological progress are associated with negative changes in income inequality. However, in the long-run, increase in technological innovation tends to increase income inequality. Results from the quadratic specification also suggest that the effect of innovation on income inequality changes from negative to positive over time, which supports the U-shaped TKC hypothesis. These results are obtained when income inequality is measured by the Gini index and top income shares while technological innovation is proxied by weighted patent applications and by the technological development index to measure innovation output in a more comprehensive manner.

Abstract

This paper investigates potential nonlinear effects of technological innovation on income inequality in South Korea over the period from 1986 to 2020. For this purpose, I test the Technological Kuznets curve (TKC) hypothesis based on the Autoregressive Distributed Lag modelling approach to cointegration. In the short-run, this study finds that positive changes in technological progress are associated with negative changes in income inequality. However, in the long-run, increase in technological innovation tends to increase income inequality. Results from the quadratic specification also suggest that the effect of innovation on income inequality changes from negative to positive over time, which supports the U-shaped TKC hypothesis. These results are obtained when income inequality is measured by the Gini index and top income shares while technological innovation is proxied by weighted patent applications and by the technological development index to measure innovation output in a more comprehensive manner.

참고문헌 (44)

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