INCOME INEQUALITY AND ECONOMIC GROWTH

Abstract

This article examines the complex relationship between income inequality and economic growth, exploring theoretical perspectives and empirical evidence. While some argue that moderate inequality can incentivize innovation and investment, others contend that excessive inequality hampers growth by limiting human capital development and social cohesion. The article reviews mechanisms linking inequality to growth, evaluates policy implications, and discusses the role of redistribution and inclusive growth strategies. Findings suggest that the impact of income inequality on economic growth is context-dependent, influenced by institutional factors, and that policies aiming to reduce inequality can promote sustainable and equitable growth.