Research Paper on Contradictions in Empirical Research and New Findings Regarding the Relationships Between Income Inequality and Sustainable Economic Growth

Description

Title: Contradictions in Empirical Research and New Findings Regarding the Relationships Between Income Inequality and Sustainable Economic Growth

Abstract: In the scientific literature, it is widely accepted that high levels of economic inequality have a negative impact on the rate and sustainability of economic growth. So, in order to promote economic growth, it is typically suggested that some regulatory measures be taken to lessen economic inequality. Should the thesis be viewed as a popular proclamation or a fact supported by science? This article examines the findings of 22 empirical investigations into the connection between economic inequality and economic growth that were conducted between 1917 and 2018. We dissected and organized the findings of earlier empirical studies using meta-analysis. In 59% of the prior empirical research, the literature review and analysis of the findings show a negative correlation between economic inequality and economic growth. The research gap is caused by the fact that, on average, these studies are rather contentious with one another, and we cannot claim to fully comprehend these relationships. We conducted our own empirical research to address the queries about the interactions between income inequality and long-term economic growth. To accomplish this, we examined panel data from 39 countries for the years 1980–2019 using a qualitative pairwise correlation comparison method. The Gini index (GI) and the gross domestic product were used to evaluate the relationship between income inequality and long-term economic growth (GDP). According to our calculations and analysis, this correlation in our sample of nations was positive on average in about 57.8% of instances during the years 1980–2018. Our study is unique in that we explicitly demonstrate the relationship between income inequality and economic growth for each individual country and, on average, for the entire sample of nations. Additionally, we adjusted our calculations for the quality of the data using the inequality transparency index. In the study, three hypotheses were investigated. Our research only supported one of them. The impact of income inequality on economic growth depends on its severity. In most cases, countries with low levels of inequality experience higher economic growth than those with higher levels of inequality. Additionally, we received some support for our other hypothesis and discovered that there is unquestionably a stronger negative correlation between economic growth and income inequality for low-income countries and a stronger positive correlation for high-income per capita nations.

Keywords: economic inequality; income inequality; poverty; economic growth; progressive taxes; government financial regulation; Gini index; GDP; sustainable growth

Paper Quality: SCOPUS / Web of Science Level Research Paper

Subject: Economics

Writer Experience: 20+ Years

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