Digital Skills and Inter-Regional Income Disparity in Europe: An Empirical Analysis

While the economic effects of digitalization are a widely investigated topic, less attention has been paid to whether individuals’ digital skills development can shorten regional income inequalities within nations. This study contributes to the literature by conducting a panel data empirical experiment, collecting records for 259 NUTS2-level regions. Statistical regressions were applied using respectively the individual level of digital expertise and the percentage distance of regions’ average disposable income relative to the national value as independent and dependent variables. The analyses included control variables, clustering of regions according to their level of productivity and distinct pre- and post-COVID periods evaluation. Results show that after the COVID-19 pandemic, digital skills significantly reduce the percentage gap between regional and national disposable income, both in the poorest and richest European regions. In contrast, regions with average development levels present the opposite trend, with digital skills negatively affecting the disposable income disparity, especially after the pandemic. Supplementary analyses using the GDP per capita gap as a dependent variable suggest that the relationship between digital skills and a region's average purchasing power might be more pronounced than with its overall productivity.