Internet use at work and income inequality in Ecuador

This study examines the impact of technological advancements, particularly Internet access, on labor income inequality. The Internet is a versatile technology with wide-ranging applications. We argue that in environments characterized by limited innovation and a polarized job market, Internet access can positively influence worker income, especially for those in lower income brackets. Our research conducted in Ecuador from 2010 to 2017 employs instrumental variable quantile regression to analyze how Internet access affects wages across various income levels. Our findings indicate that using the Internet at work correlates with higher wages in Ecuador, particularly benefiting workers in the higher quantiles of the income distribution. While the income gap between employees with and without Internet access is largest in the lowest quantile, it decreases in the second quantile and widens again in the third, but never surpasses the gap observed in the first quantile. Public policy should thus provide citizens, particularly in the lowest income deciles, with education on effective Internet usage to improve their conditions and reduce inequality. By concentrating on these groups, we can better distribute the advantages of Internet access, ultimately creating a more balanced and equitable society. •The individuals in the higher quantiles experience greater advantages in terms of real labor income when using the Internet.•The utilization of the Internet in the workplace in Ecuador during the years 2010 and 2017 has a positive effect on wages on average.•The disparity in income participation between the lowest and highest quantiles decreased among Internet users in the workplace, whereas this disparity increased for individuals who did not utilize this tool at work.•We conducted an analysis using quantile regression to determine the changes in the representation of each quantile of the total wage.