Effects of Technological Change on Income Inequality in Thailand

Abstract

This paper examines the impact that technological change has on income inequality in Thailand. Total factor productivity (TFP) is measured as a proxy for technological progress while the Gini coefficient represents income inequality. Since income inequality is an issue that has lasted for several decades and tends to concentrate in certain areas, both national-level yearly data (1988-2017) and provincial-level panel data (76 provinces during 2009-2017) are employed using regression analysis. The results show that an increase in TFP reduces income inequality in the long run. Other factors that help in alleviating inequality are human capital, increasing income per capita, and
declining agricultural GDP shares. In contrast, trade openness and FDI increase inequality. Additionally, the significance of spatial correlation among provinces implies that the policy should target groups of provinces in close proximity rather than focusing on various small areas.