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Income Inequality and Economic Growth: A Comparative Study of Developed and Developing Nations

Chief Editors:  Mr. Irshadullah Asim Mohammed, Dr. Yogesh Mohan Gosavi, and Prof. (Dr.) Vineeta Kaur Saluja

Associate Editor: Mrs. Sruthi S

Co-Editors: Dr. S. Rajeswari, Dr. Nikhil Saini, and Ms. Atreyee Banerjee

ISBN:  978-81-985805-1-1

Chapter: 21

DOI: https://doi.org/10.59646/mrnc21/321

Author: Dr. Jagdish Kumar Sahu

Abstract

Income inequality and economic growth share a complex and dynamic relationship that varies across developed and developing nations. This comparative study examines the impact of income inequality on economic growth, considering structural differences, policy interventions, and socio-economic factors in both groups of countries. While developed nations often experience moderate inequality alongside stable economic growth, developing countries tend to face higher levels of inequality, which can hinder long-term growth prospects. The study explores key determinants such as access to education, wealth distribution, labor market conditions, and government policies that influence this relationship. Findings suggest that in developed nations, inequality may sometimes incentivize investment and innovation, whereas in developing economies, excessive inequality can limit human capital development, reduce social mobility, and create economic instability. The research also highlights the role of inclusive policies, progressive taxation, and social welfare programs in mitigating inequality’s adverse effects. By providing a comparative analysis, this study aims to offer policy recommendations that promote sustainable economic growth while addressing disparities in income distribution.

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