Is Information and Communication Technology a Productivity Drain or Gain? Evidence from the Health Services Sector in China

Abstract

This contribution investigates the impact of information and communication technology (ICT) on health service performance and considers the issue of income inequality. It provides empirical evidence that the development of ICT helps to mitigate the negative impact of income inequality on health and thereby providing support for the vigorous development of ICT. Specifically, by using the Driscoll-Kraay standard error estimation, Generalized Method of Moments, and a panel threshold model, a nonlinear relationship is detected, and the results show that: (1) ICT can significantly promote the performance of the health service sector. As income inequality increases, the effects of ICT on health care performance become larger. (2) With the increase from a lower to a higher income inequality level, the positive impact of ICT development on health service enables productivity to increase significantly. Finally, policy recommendations for promoting health service productivity, based on our theoretical contribution and empirical results, are provided.

JEL: H51, I18, O3