Abstract

The Advances in digital technology have an impact on various aspects of life in society, especially socio-economic activities in Indonesia. The increasingly widespread development of digital technology has also created pessimism about the role of digital technology in reducing income inequality. This research aims to determine the influence of digital technology developments in terms of infrastructure access, use and ICT skills on income inequality in the Western Region of Indonesia (KBI) and the Eastern Region of Indonesia (KTI). This research uses data from 17 Western Provinces and 17 Eastern Provinces during the 2018-2022 period. The analytical method used in this research is multiple linear regression. Based on the results of the Fixed Effect Model (FEM) for KBI, it shows that the use of ICT has a negative influence on income inequality. ICT skills have a positive influence on income inequality. Access of ICT infrastructure does not have a significant effect on income inequality. Meanwhile, the results of the Random Effect Model (REM) for KTI show that partially the variables of infrastructure access, use and ICT skills do not have a significant influence on income inequality.

Keywords: Income Inequality, Digital Technology, Western Region of Indonesia, Eastern Region of Indonesia