EMPIRICAL ANALYSIS OF FACTORS IMPACTING EQUALITY IN INCOME DISTRIBUTION AND ECONOMIC GROWTH, A STUDY OF GROUP OF COUNTRIES WITH LOWER-THAN-AVERAGE LEVELS OF INEQUALITY AND ECONOMIC GROWTH

Abstract

Using estimation of simultaneous equations on data that have been grouped by countries based on both economic development and income inequality in period 1980 – 2019, the research has once again confirmed the relationship between income inequality and economic growth in the group of countries with lower than average levels of inequality and economic growth. Growth creates conditions to improve income inequality while moderate income inequality stimulates growth. The research also finds out the impact of a number of factors that are thought to have a impact on both economic growth and income inequality, including: education, health, investment in infrastructure, industrialization, urbanization, globalization, technical progress and inflation. Factors found to favor both growth and income inequality include investment in education and investment in health. From the estimated results, the research has proposed a number of solutions to achieve both economic growth and income equality in this group of countries.