The Technology-Inequality Nexus in India: Long-Term Evidence for Policy and Sustainable Development
DOI:
https://doi.org/10.69980/0knvqr56Keywords:
Technological Change, Income Inequality, ARDL, Structural Break, Education, India, Toda–YamamotoAbstract
In this study, technological advancement and its influence on income inequality in India are examined over the period 2004–2024, which was marked by rapid digital expansion, increased investment in research and development, and substantial structural transformation within the economy. The analysis uses time-series data in annual frequency and ties the Autoregressive Distributed Lag (ARDL) approach to examine both long-run and short-run movements among the variables. Income inequality is measured with the Gini index from the SWIID database, while technological advancement is captured through gross domestic expenditure on R&D as a share of GDP. Education, reflected by the share of people with at least secondary schooling, and real GDP per capita growth are added as core controls. A post-2020 dummy accounts for the disruption caused by the COVID-19 shock. The results show that technological progress has increased inequality in both the short run and long run, which is broadly consistent with the pattern of skill-biased technological change observed in many developing economies. Education works in the opposite direction and helps in reducing inequality, showing that human capital continues to play a strong equalising role. Economic growth has a mild but positive effect on inequality, raising concerns about the inclusiveness of India’s growth path. The Toda–Yamamoto causality test supports a one-way causal effect running from technology and education to inequality. The study adds to the recent literature by combining ARDL estimates with Toda–Yamamoto causality within a single time-series setting and by placing India’s experience within the wider debate on sustainable and inclusive development. The use of a structural-break dummy for the post-pandemic period allows the paper to capture how technological and educational channels behaved during a major shock. The results show that India needs to improve access to digital technologies for all sections of society. increase investment in education and skill development and introduce labour policies that support Low-Skilled workers. Without these efforts, the benefits of technological progress may not reach poorer and disadvantaged groups, and inequality could continue to increase.
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