The technology, innovation, and income inequality nexus: an investigation on G7 countries

Abstract

This paper aims to explore the causality nexus among technology, innovation, and income inequality for G7 countries. For this aim, the bootstrap panel Granger approach is employed. The dataset covers the years between 1981 and 2015. Using two different Gini coefficients with pre-tax and post-tax income, the impact of income taxes on the nexus above is investigated. The results indicate that the bi-directional causality nexus is not detected in G7 countries except France. The signs of the nexus become different by countries. In this differentiation, income tax plays an important role. The novelty of this paper is to consider both the bi-directional causality and the effect of income tax in the technology, innovation, and income inequality nexus. It is thought that obtained findings may play a significant role in determining income distribution policies for policymakers.