Income Inequality and Poverty Reduction Across Global Economies: Evidence from Long-Term Distributional Indicators

Dr Shruti Bhuttani

Authors

Dr Shruti Bhuttani Assistant Professor, Maharaja Surajmal Institute, GGSIPU

Keywords:

Income Inequality, Poverty Reduction, Gini Index, Income Distribution, Panel Data Analysis

Abstract

Income inequality and poverty alleviation are still the focus of the global economic development discussions, especially in terms of distribution of economic benefits between countries. We explored the long-term linkages between income inequality and poverty based on historical distributional indicators for the period 1974–2018. A quantitative longitudinal design was used, using 1,486 country-year observations in 164 countries. Assessment of inequality–poverty association was done using descriptive statistics, Pearson correlation analysis, pooled ordinary least-squares regression and two-way fixed-effects models. The results showed that the mean Gini index decreased from 44.13 in the period 1990–1999 to 36.80 in 2010–2018, and extreme poverty decreased from 22.56% to 6.12% during the study periods. Income inequality, measured by poverty headcount ratios at three international poverty levels, was found to be positively correlated with each other. The fixed-effects estimates showed that the associations were statistically significant, ranging from 0.335 to 0.602. Significant regional variation was observed, with negative relationships in East Asia and the Pacific, and more positive relationships in South Asia. The overall conclusions were confirmed by using alternative poverty measures in the robustness analysis. The study underscores the need to design policies and build development in a distribution-sensitive manner and to appreciate that correlation does not imply causation. Other longitudinal studies are required to better understand the economic mechanisms at work.

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