Horizon-Dependent Transmission of the Twin Transition on Income Inequality: A Pooled Mean Group Analysis for Emerging Economies

This study examines the time-horizon-dependent transmission mechanisms through which the "twin transition" affects income inequality, utilizing a macroeconomic dataset covering 18 developing economies over the 2004-2024 period. The empirical analysis employs the Pooled Mean Group (PMG) estimator, based on the Panel ARDL bounds testing approach. The empirical findings reject the traditional model-which incorporates the skill-biased technological change hypothesis-for this group of developing countries. The PMG estimation results demonstrate that an increase in the internet usage rate - representing digitalization - plays a statistically significant, inequality-reducing role in both the short and long term. In other words, digitalization fosters financial inclusion, which in turn supports inclusive growth. Conversely, the green transition variable was found to be statistically insignificant in both time horizons, suggesting that the costs associated with the transition to renewable energy in these countries have not yet reached the macroeconomic threshold required to structurally alter or improve income distribution