Income Inequality and Its Impact on Long-Term Economic Growth

Abstract

This research investigates the relationship between income inequality and long-term economic growth, focusing on how income distribution influences economic performance. Utilizing a mixed-methods approach, the study combines quantitative cross-country data analysis, employing regression models to identify the correlation between income inequality, measured by the Gini coefficient, and GDP growth rates. The findings reveal a statistically significant negative relationship, indicating that higher income inequality is associated with slower economic growth, particularly in low-income countries. Furthermore, qualitative case studies of countries such as Sweden and Brazil illustrate the varying impacts of income inequality on growth, highlighting the importance of context and policy interventions. While Sweden's inclusive policies have fostered economic stability, Brazil's high inequality has led to social unrest and hindered growth. This study emphasizes the critical need for comprehensive policies to reduce income inequality and promote sustainable economic development. By contributing to the ongoing discourse on economic policy, the research underscores that a more equitable income distribution is essential for achieving long-term prosperity. Future research should explore specific strategies for addressing income inequality and its implications for economic growth in diverse socioeconomic contexts, enhancing the understanding of effective interventions for inclusive development.