AN ANALYSIS OF THE RELATIONSHIP BETWEEN INCOME INEQUALITY AND ECONOMIC DEVELOPMENT

Abstract

The aim of this paper is to identify the connection between economic development and income inequality, emphasizing how differences in income distribution have a big impact on both social well-being and economic progress. In order to discriminate between the possible advantages and disadvantages of income disparity, it starts by presenting theoretical frameworks that explain its dynamics. On the one hand, moderate income disparity may, encourage investment and entrepreneurship, which might stimulate economic growth and innovation. However, Excessive disparity, frequently results in social unrest, limited opportunities for marginalized groups, and restricted access to necessary services, all of which impede economic stability and sustainable 
growth. Further examining empirical data from several nations, the research shows how excessive inequality is linked to negative economic consequences, such as lower consumer demand and higher rates of poverty. It also talks about how important policies like social expenditure and fair taxes are for reducing inequality and fostering inclusive prosperity. In the end, this research argues that 
tackling income disparity is crucial to creating all-encompassing economic plans that support inclusive and sustainable growth, thereby creating the framework for a more just and prosperous future.