The Impact of the Digital Divide on Wage Gaps among Individuals in Pakistan

Abstract

The revolution in information and communications technology (ICT) has brought about a significant improvement in connectivity all over the world and has permeated most facets of contemporary human life. The digital revolution is already underway and will be the fourth major shift in the industrial sector. Despite the fact that Pakistan has achieved considerable strides in the field of information technology over the past several years, the country still ranks 135th out of 144 in terms of its access to the internet. This low level of usage of information and communications technology is a potential source of the wage gap between individuals. In order to achieve this goal, this study conducts research on the impact of the digital divide on the wage gap that exists among individuals in Pakistan. The use of information and communications technology is a synthesis of several digital abilities. For the purpose of empirical analysis, data obtained from the PSLM – HIES survey (2018-2019) was utilized. The quantile regression model serves as the foundation for the empirical results. According to the estimations provided by the quantile regression, the difference in individual wages may be well explained by factors like ICT usage capacities and socioeconomic, demographic, and regional factors. The findings of the study suggest that individuals who know the use of all digital skills earn more than those who do not know the use of any skill. The highest differences in earnings are observed at the upper quantile (90th percentile) of the digitally skilled individual versus the unskilled or low-skilled. The differences in wages were observed across the level of education, occupation, area, province, age, and disability of individuals. The study's findings are related to target 10.4 of the SDGs to ensure equal opportunity and reduce inequality in outcomes. The study proposes some policy measures to bridge the wage gap through ICT penetration.