Impact of Income Distribution on Social and Economic Well-Being of the State

Yuriy Bilan,Halyna Yurchyk,Halyna Mishchuk,Natalia Samoliuk

doi:10.3390/su12010429

Abstract

Income distribution can cause large-scale transformations in human resources structure, essential changes of economic outputs via its impact on life satisfaction and motivation of work. Thus, the overall objective of this research is to improve methodological tools of income distribution analysis based on identifying the links between different structural indicators of income inequality and the most essential features of social and economic well-being. We conducted comparative analysis of EU Member States and Ukraine. We used structural analysis based on two forms of income distribution—functional (share of “labour” in Gross domestic product - GDP) and household one (ratio of incomes measured by special decile coefficients) to identify income inequality and inconsistencies in distributive strategies. By grouping European countries according to economic well-being (described as GDP per capita) and inequality in income distribution (based on Gini coefficient), we determined apparent tendencies in distributive policies and revealed links between income distribution and connected social-economic features of well-being. We conclude that countries with the most stable and clear patterns in income distribution have distinct connections between the share of labour costs in GDP and successes in social and economic spheres, including human development level, property rights protection, GDP growth, possibilities for taxation and budgeting of social programmes.

Highlights

The issue of a fair income distribution has always been, and is at the heart of, scientific research, owing to the fact that fair income distribution in the economy is a motivating factor for its legalisation, effective employment and business activities, and, for the social and economic development of the state and regions
On the basis of the study, it can be concluded that the fair income distribution, both as a whole according to the factors of production and at the household level, positively affects the possibilities of achieving economic and social well-being
We suggested applying our approach towards the combination of functional and household income distribution to investigate the basis of income inequality formation related to socioeconomic well-being of the state

Summary

Introduction

The issue of a fair income distribution has always been, and is at the heart of, scientific research, owing to the fact that fair income distribution in the economy is a motivating factor for its legalisation, effective employment and business activities, and, for the social and economic development of the state and regions. In developing countries, and in developed ones, inequality is a fact recognised by scientists as a largely constraining social and economic progress and predetermines the imbalances of regional development [3,4,5]. In this case, one of the most famous works in the field of study of inequality and possibilities of its eradication, grounded by Doyle, M.W. and Stiglitz, J.E. One of the most famous works in the field of study of inequality and possibilities of its eradication, grounded by Doyle, M.W. and Stiglitz, J.E. [6], confirms the complexity of the problem of income sharing analysis and, as the most important, the substantiation of its acceptable proportions—such ones that would not interfere with the development of the country and personal well-being

Objectives

Methods

Results

Discussion

Conclusion