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The Nexus Between Inequality and Economic Growth in European Transition Countries

Author

Listed:
  • Linda Kadriji

    (South East European University, North Macedonia, Faculty of Business and Economics)

Abstract

The main objective of this paper is to empirically investigate the impact of income inequality on economic growth and its determinants in transition countries (Albania, Kosovo, Serbia, Hungary, Estonia, Czech Republic, Poland, Russia, and North Macedonia) during the period 2000-2020. This research employs econometric methods, including Ordinary Least Squares (OLS) with robust standard errors, random and fixed effects models, and the Hausman-Taylor model with instrumental variables (IV). The findings from this empirical research highlight two key conclusions: first, that reducing income inequality positively influences economic growth; and second, that subsidies and transfers play a crucial role in decreasing income inequality, which in turn fosters economic growth in transition countries.

Suggested Citation

  • Linda Kadriji, 2024. "The Nexus Between Inequality and Economic Growth in European Transition Countries," Bulgarian Economic Papers bep-2024-04, Faculty of Economics and Business Administration, Sofia University St Kliment Ohridski - Bulgaria // Center for Economic Theories and Policies at Sofia University St Kliment Ohridski, revised Aug 2024.
    • Handle: RePEc:sko:wpaper:bep-2024-04
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    File URL: https://uni-sofia.bg/index.php/eng/content/download/315234/2040865/file/BEP-2024-04.pdf
    File Function: First version, 2024
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    More about this item

    Keywords

    Gini index; economic growth; subsidies and transfers;
    All these keywords.

    JEL classification:

    • B41 - Schools of Economic Thought and Methodology - - Economic Methodology - - - Economic Methodology
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General

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