Unpacking the growth–inequality nexus: the moderating effect of technological innovation in high-income and Middle-income countries

This study analyzes the relationship between economic growth and income inequality, with a particular focus on the role of technological innovation. Using data from high- and middle-income countries during the 2008–2021 period and employing the SGMM estimation method, the findings reveal that inequality tends to persist due to unequal access to education, weak institutional frameworks, and skill disparities in the labor market. Economic growth contributes to reducing inequality, especially in high-income countries; however, its effectiveness is constrained in the absence of redistributive policies. Technological innovation presents a double-edged effect, it can exacerbate income gaps through skill-biased changes, but may also help narrow inequality when supported by strong institutions and a well-prepared workforce. These findings suggest that addressing inequality requires more than isolated efforts. Instead, it calls for comprehensive, long-term strategies rooted in transparent and accountable governance.