Socio-economic development, income inequality and redistribution

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JEL classification

• National Government Expenditures and Related Policies: General
• Welfare, Well-Being, and Poverty: Government Programs; Provision and Effects of Welfare Programs

Keywords

income inequality, social protection expenditure, socio-economic development, redistribution, welfare state

Abstract

Tackling the issue of income equity through redistribution consists of a discussion about the extent and forms of redistribution. The study responds to the issue of income redistribution defined within the neoclassical welfare economy by addressing the research question concerning the relation of the selected areas of social policy (expenditure of social protection) and of socio-economic development (Human Development Index, Gini coefficient). The study uses a quantitative approach to the research question, statistically tests the relation between social protection expenditure and socio-economic development, and tests income inequality using the Pearson’s correlation coefficient. The results show that social protection expenditure on health care and old age had a positive impact on socio-economic development, assessed through the Human Development index; only social protection expenditure on disability had a negative impact on socio-economic development. Also, social protection expenditure on health care, on the disabled and on old age had a mainly negative impact on income inequity, based on the Gini coefficient.