INCOME INEQUALITY AND ECONOMIC DEVELOPMENT: A CROSS-COUNTRY ANALYSIS OF GLOBAL DEVELOPMENT INDICATORS
Abstract
Addressing income inequality is still a significant challenge in the path of inclusive and sustainable economic development. Korea's Gini coefficient of income inequality index and economic development were analyzed with the unbalanced panel data of 2016-2022. GDP per capita was the primary measure of economic development, and the Gini Index was the measure of income inequality. Descriptive statistics, country and year fixed-effects regression, correlation analysis and income group comparison were performed. The findings revealed that log GDP per capita and Gini Index were negatively correlated. The results from the fully adjusted fixed-effects model showed that increased income inequality was still significantly related to decreased GDP per capita. Unemployment was also highly negatively correlated with economic development, while life expectancy was highly positively correlated and significant. The use of the Internet was not significantly associated with the health expenditure in the final model. The income-group analysis also revealed that the average inequality was the highest in low-income countries, the lowest Gini value was observed in high-income countries, and the highest GDP per capita was observed in high-income countries. But the short-term robustness test, which was based on the rate of annual GDP growth, did not reveal any significant association between inequality and short-term growth. Results indicate that the income gap is more connected to the level of development over time than to the economic condition over time. Employment, health, social protection, education, and inclusive finance policies can help foster more equitable development.
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