Title: Inequality and economic growth across countries of the Eurozone

Authors: Tatyana Boikova; Aleksandrs Dahs

Addresses: Department of Business Administration, Baltic International Academy, Riga, Latvia ' Centre for European and Transition Studies, University of Latvia, Riga, Latvia

Abstract: The EU economic recovery after the financial crisis is being accompanied by sluggish and unsteady growth with high levels of inequality. The relationship between income inequality and the rate of economic growth still remains a controversial issue with discrepancies in the results reported in many empirical and theoretical studies of growth and development. We explore the impact of income inequality, poverty, and wealth on the rate of economic growth in the Eurozone. We find that the effect of income inequality on economic growth is statistically insignificant, whereas poverty and savings have a negative, statistically significant effect on growth, while the effect of financial assets is positive, and statistically significant. We reveal a negative, statistically significant effect of consumption on growth. We show that the dynamics of the link between inequality and growth across countries does not take the inverted-U shape of curve for both all observations and the average values per country in the Eurozone.

Keywords: income inequality; economic growth; Eurozone countries.

DOI: 10.1504/IJSE.2018.095254

International Journal of Sustainable Economy, 2018 Vol.10 No.4, pp.315 - 339

Received: 27 Sep 2017
Accepted: 30 Dec 2017

Published online: 06 Aug 2018 *

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