Economic inclusion in the labour market and its impact on the regulation of income inequality

Nataliia Suprun and Lеsia Didkivska
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Nataliia Suprun: State Organization «Institute for Economics and Forecasting of the National Academy of Sciences of Ukraine»
Lеsia Didkivska: State Organization «Institute for Economics and Forecasting of the National Academy of Sciences of Ukraine»

Economic Synergy, 2026, issue 1, 72-83

Abstract: The article examines economic inclusion in the labour market as an important mechanism for transforming the primary distribution of income and an effective instrument for regulating inequality in Ukraine under conditions of wartime challenges and structural disproportions. The subject of the research is the impact of formal employment on the configuration of household income distribution. The purpose of the study is to provide a theoretical justification and quantitative assessment of the role of economic inclusion in the labour market as a factor in transforming the primary distribution of income and as an instrument for regulating inequality in Ukraine. This is achieved through the analysis of institutional employment mechanisms, structural barriers to access to the formal sector, and a quantitative assessment of the impact of employment expansion on the parameters of income distribution. he methodology is based on the analysis of official employment statistics, administrative data from the State Employment Service, and regulatory parameters of inclusive instruments of state regulation. he results show that the growth of employment, particularly among internally displaced persons, generates an additional fund of labour income and shifts a share of households from the lower deciles to middle-income groups. At the same time, labour market segmentation, territorial differentiation of wages, and a significant share of informal employment limit the equalising effect of inclusion. he practical significance of the results lies in substantiating the need to integrate employment policy with fiscal mechanisms aimed at formalising incomes and improving the quality of jobs.

Keywords: economic inclusion; labour market; formal employment; primary income distribution; income inequality; economic inequality; informal employment; tax policy; social policy; economic growth; public governance (search for similar items in EconPapers)
JEL-codes: H70 L31 R58 (search for similar items in EconPapers)
Date: 2026
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Persistent link: https://EconPapers.repec.org/RePEc:bja:isteus:y:2026:i:1:p:72-83

DOI: 10.53920/ES-2026-1-5

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