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

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.