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The way to sustainable development through income equality: The impact of trade liberalisation and financial development
Author(s) -
Gharleghi Behrooz,
Jahanshahi Asghar Afshar
Publication year - 2020
Publication title -
sustainable development
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.115
H-Index - 64
eISSN - 1099-1719
pISSN - 0968-0802
DOI - 10.1002/sd.2051
Subject(s) - economics , economic inequality , per capita income , inequality , income distribution , developing country , sustainable development , liberalization , order (exchange) , per capita , comprehensive income , international economics , economic growth , finance , public economics , gross income , market economy , population , mathematical analysis , demography , mathematics , tax reform , sociology , political science , law , state income tax
The main aim of this paper is to examine the threshold impact of financial development and trade liberalization on income inequality as a measure of sustainable development in a sample of developed and developing countries using panel threshold analysis. Two major dimensions of financial development are considered: liquid liabilities and stock market capitalization. The empirical results revealed that financial development reduces income inequality only in countries where their GDP per capita is above ~US$11,000. It has no significant impact in reducing inequality in developing countries. This implies that institutional reforms in less developed and developing countries are necessary in order to reap the gains from financial development. Trade liberalization is found to have a positive impact on income inequality for both country groups—that is, trade benefits have worsened the income distribution.