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Business & Economics

THE IMPACT OF SOCIAL AND ECONOMIC FACTORS ON INCOME INEQUALITY IN EU COUNTRIES
Rasa Bartkute, Ingrida Griesiene, Jurga Grikietyte-Cebataviciene, Milica Delibasic

ABSTRACT: This paper empirically investigates the impact of social and economic factors on one of the most important social indicators of Sustainability - income inequality in EU countries. By analysing the relationships between various factors and income inequality, the article seeks to provide insights into the root causes of income inequality in the EU and identify policy options for reducing it.An ordinary least squares regression (OLS) and fixes effects regression models are wildly used to analyze an inequality issues. OLS models are based on the mean of variables. OLS estimates how independent variables are related to the mean value of the dependent variable, but does not show relationship to different points in the value of the dependent variable. However, the impact of such socio-economic factors as human development on income inequality can depend on both the level of human development and the level of income inequality. We use quantile regression (QR) to verify this assumption. QR makes it possible to evaluate and compare the effect of socio-economic factors on income inequality at different points of inequality (quantiles). The results of the study provide useful information for searching of effective measures to manage income inequality, given the depth and level of inequality.

KEYWORDS:  income inequality, Sustainability, Human development index (HDI), social economic factors.

JEL classification:  G1, N5, O1, Q5