Gyventojų pajamų nelygybės poveikio ekonomikos augimui analizė Europos Sąjungos šalyse ; Analysis of personal income inequality effect on economic growth in the European Union countries

Abstract

Jankutė, N. (2016). Analysis of personal income inequality effect on economic growth in the European Union countries: Economic curriculum master's thesis. Advisor prof. dr. Zita Tamašauskienė. Šiauliai University, Department of Economics, 71 p. (87 p.). This master's thesis studies the effect of income inequality on economic growth. The purpose: after having discussed income inequality and economic growth related questions, to analyze theoretically the effect of personal income inequality on economic growth, and to analyse effect of income inequality in terms of economic growth of EU groups of countries with different economic development levels. The first part analyzes discussion issues of effect of income inequality on economic growth. After discussing the income inequality and economic growth concepts, measurement indicators and underlying factors, effect of income inequality on economic growth and main channels of the effect are theoretically analyzed, empirical research review of such effect is made. The second part contains the empirical research process and methodology. In the course of analysis, European Union member states are divided into high and lower development level groups according to 2000 - 2014 GDP per capita. In the analytical part income inequality is measured by the Gini index, income distribution in the first and tenth deciles and quintiles at ratio S80/S20. After discussing the dynamics of economic growth and income inequality indicators, by changing the income inequality measurement indicators, four test models in each group of countries are compiled. In order to assess the effect of income inequality on economic growth, these models are used to perform regression analysis in the identified groups of countries. The results showed that effect of personal income inequality on economic growth depends on the level of development of the countries and the income inequality indicator applied. It was found that in the high development level EU countries group, growth of Gini index, income distribution in the tenth decile and S80/S20 index has a positive effect on economic growth, while in the lower development level EU countries group, growth of income inequality has a negative impact on the countries' economic growth. In addition, it was found that the distribution of income in the first decile has no statistically significant effect on economic growth.