The Impact of Covid-19 on the Digital Divide in Online Shopping: Evidence from a Local Outbreak in South Korea

We examine the impact of COVID-19 on the digital divide in online shopping between older and younger people. To measure the generational disparity in online consumption, we construct online spending shares by age group using credit card data linked to cardholders’ demographic characteristics. We estimate the difference-in-difference model based on an exogenous regional outbreak of COVID-19 caused by the activities of a religious sect in South Korea. We find that older people are less likely to shift their spending online than younger people, thereby increasing the generational digital gap. During the pandemic, the limitation of online substitution of older people results in decreases in their total consumption while that of younger ones changed little. Furthermore, the widened disparity persists even after the COVID-19 slowdown. Our findings suggest the need for policies aimed at closing the digital divide in the post-COVID-19 era.