Perceptions of Corruption, Inequality, and the Fragility of Prosperity in Europe

Gheorghița Dincă () and Christian-Gabriel Strempel
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Gheorghița Dincă: Department of Finance, Accounting and Economic Theory, Faculty of Economic Sciences and Business Administration, Transilvania University of Brasov, 500036 Brasov, Romania
Christian-Gabriel Strempel: Department of Finance, Accounting and Economic Theory, Faculty of Economic Sciences and Business Administration, Transilvania University of Brasov, 500036 Brasov, Romania

Economies, 2025, vol. 13, issue 10, 1-27

Abstract: This study examines the complex relations between corruption, income inequality, and sustainable economic development within the European Union (EU) for the 2003–2023 period. Employing panel data for all 27 EU member states, as well as for the subgroups of Old (OMS) and New Member States (NMS), the analysis applies pooled OLS, random- and fixed-effects models, and panel-corrected standard errors (PCSE) estimations. The results indicate that higher perceived corruption is robustly associated with greater income inequality, while higher tertiary education attainment, greater social protection expenditures, and increased urbanization apparently reduce inequality. Subsample evidence reveals that institutional context conditions the strength of these relationships, with NMS exhibiting a more significant corruption–inequality nexus. These findings highlight that achieving sustainable and inclusive economic growth in the EU depends on institutional integrity and good governance. Strengthening anti-corruption frameworks, investing in human capital, and enhancing social protection are essential policy instruments for supporting the EU’s sustainable development objectives.

Keywords: corruption; income inequality; economic development; European Union (search for similar items in EconPapers)
JEL-codes: E F I J O Q (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:gam:jecomi:v:13:y:2025:i:10:p:296-:d:1769302

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