The Nexus Between Inequality and Economic Growth in European Transition Countries

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

Bulgarian Economic Papers from Faculty of Economics and Business Administration, Sofia University St Kliment Ohridski - Bulgaria // Center for Economic Theories and Policies at Sofia University St Kliment Ohridski

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.

Keywords: Gini index; economic growth; subsidies and transfers (search for similar items in EconPapers)
JEL-codes: B41 D63 H20 (search for similar items in EconPapers)
Pages: 11 pages
Date: 2024-08, Revised 2024-08
New Economics Papers: this item is included in nep-cis, nep-eur, nep-gro and nep-tra
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Persistent link: https://EconPapers.repec.org/RePEc:sko:wpaper:bep-2024-04

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