Broadband expansion and income inequality: Nonlinear evidence and the conditioning role of institutional quality in a global panel

This paper examines whether fixed broadband penetration, an enabler of technological globalization, exhibits a nonlinear relationship with income inequality and whether institutional quality conditions this relationship. Using an unbalanced panel of 164 countries over the period 1998 to 2024, estimated with two-way fixed effects and country-clustered standard errors, the analysis finds that broadband penetration is associated with income inequality in a U-shaped pattern. At low penetration levels, broadband expansion is associated with lower disposable income inequality, consistent with information democratization and market access channels; beyond a turning point of approximately 9.95 subscriptions per 100 people, further expansion is associated with rising inequality, consistent with skill-biased technological change and platform concentration dynamics. The relationship differs with democratic accountability and political stability. Stronger Voice and Accountability is associated with a turning point at lower penetration levels, with conditional turning points ranging from approximately 7 subscriptions per 100 people at the 75th percentile of institutional quality to levels outside the observed range at the 25th percentile. The pattern persists under market income Gini, lagged broadband, a flexible spline, and two-way clustered inference, and is directionally consistent with, but not independently identified by, IV estimation. It does not survive region-by-year fixed effects or country-specific trends, and is best read as a within-country association. The results suggest that institutionally capable countries may reach the disequalizing phase sooner, so redistributive policy responses may need to be in place before, not after, broadband penetration approaches relatively low levels.