The Relationship Between Income Inequality and Economic Growth: Theoretical and Empirical Approaches

Abstract

This study aims to analyze the relationship between income inequality and economic growth through theoretical and empirical approaches. Using five countries with different levels of inequality and economic policies, the study explores how inclusive fiscal policies, such as higher social spending and progressive taxes, affect income inequality and its impact on economic growth. The results show that countries with stronger redistribution policies tend to have lower income inequality and more stable economic growth. In contrast, countries with high inequality and weak redistribution policies experience limitations in achieving inclusive growth. The study also highlights the importance of fiscal policies that balance economic growth and social equity to create sustainable development. These findings provide practical implications for policymakers in designing more inclusive development strategies