Phool Hussain, Muhammad Junaid Nasrullah, Muhammad Asif Iqbal

A Comparative Analysis of Income Inequality and Human Development across the World

Introduction

A comparative analysis of income inequality and human development across the world. Explore the global relationship between income inequality and human development (HDI, education, health, income). A study of 66 countries reveals a strong negative correlation.

Abstract

Numerous studies have looked at the relationship between income disparity and economic progress. They believed that economic growth was reflected in the GDP per capita. People's decisions have a direct impact on progress. As people grow as a result of human development, their options increase. This idea encompasses a wide spectrum of human choices.Additionally, inequality may hurt living standards, health, and education. This study looked at how income inequality affects human development across national boundaries. The education index (EI), health index (HI), and income index (IX) are the three subindices that make up the human development index (HDI), which we utilized as a measure of human development. The Gini Coefficient has been used to quantify income inequality. As dependent variables, HDI, EI, HI, and IX have been estimated using four econometric models. An analysis of panel data of 66 countries from 2004 to 2022 was conducted using the Hausman test to identify whether fixed and random effects were equally appropriate. The Drisc and Kray method, as well as Generalized Least Squares, have also been used to produce consistent results in descriptive statistics. There is a negative correlation between HDI, EI, HI, and IX and income inequality, according to empirical findings. Human choice can be expanded through the reduction in income inequality, especially in low HDI economies.

Review

The study, "A Comparative Analysis of Income Inequality and Human Development across the World," tackles a highly pertinent and critical issue in global development discourse. The authors clearly articulate their objective: to investigate the impact of income inequality on human development across national boundaries. By employing the Human Development Index (HDI) and its sub-indices (Education, Health, and Income) as comprehensive measures of human development, alongside the widely accepted Gini Coefficient for income inequality, the research establishes a robust framework. The use of panel data spanning 66 countries over an 18-year period (2004-2022) signifies a commendable effort to capture dynamic relationships and enhance the generalizability of findings. The methodological approach described in the abstract demonstrates a commitment to econometric rigor. The application of four distinct econometric models, alongside the Hausman test to appropriately determine fixed or random effects, suggests a careful consideration of panel data characteristics. Furthermore, the inclusion of the Drisc and Kray method and Generalized Least Squares (GLS) points to an effort to produce consistent and reliable results, addressing potential issues common in cross-national panel analyses. The empirical findings indicate a consistent negative correlation between income inequality (Gini Coefficient) and all aspects of human development (HDI, EI, HI, and IX). This central finding reinforces the widely held belief that high levels of income disparity hinder progress across multiple dimensions of human well-being. The study's conclusion, that reducing income inequality can expand human choice, particularly in low HDI economies, offers a significant policy implication. This finding provides empirical support for targeted interventions aimed at redistributive policies and inclusive growth strategies, especially where human development is most constrained. While the abstract outlines a strong methodological foundation, a full paper would ideally elaborate on the specific nature of the four econometric models employed and the theoretical underpinnings guiding their selection. Nonetheless, this research appears to offer a valuable contribution to the understanding of the complex interplay between economic disparity and human flourishing, providing crucial evidence for policymakers striving for more equitable and developed societies.

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