Income inequality and Stagnation : A causal relationship?
Stick, Vilma (2014)
Stick, Vilma
Metropolia Ammattikorkeakoulu
2014
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Julkaisun pysyvä osoite on
https://urn.fi/URN:NBN:fi:amk-201405229327
https://urn.fi/URN:NBN:fi:amk-201405229327
Tiivistelmä
The aim of this thesis is to investigate the relationship of income inequality and economic development.
The literature review will begin with a literature review that will cover the basic economic theories behind income generation and income distribution. After this the theory behind the business cycle, economic growth and stagnation is explained with the help of economic literature. After the basic concepts have been covered, the study moves on to determine income inequality and how it is measured. The mechanisms that create income inequality are discussed after this and the literature review will close with the effects that income inequality has on the economy, and how these effects can be seen in the latest economic crisis.
The research describes the development of the measure of income inequality, the GINI coefficient, in 16 countries chosen randomly. This development is then compared to the development of the economic growth of each country. Lastly, we will analyse the data gathered in order to answer our research question: Do increasing income inequalities cause stagnation in the economy and does increased income inequality make recovery from a crisis more difficult?
The literature review will begin with a literature review that will cover the basic economic theories behind income generation and income distribution. After this the theory behind the business cycle, economic growth and stagnation is explained with the help of economic literature. After the basic concepts have been covered, the study moves on to determine income inequality and how it is measured. The mechanisms that create income inequality are discussed after this and the literature review will close with the effects that income inequality has on the economy, and how these effects can be seen in the latest economic crisis.
The research describes the development of the measure of income inequality, the GINI coefficient, in 16 countries chosen randomly. This development is then compared to the development of the economic growth of each country. Lastly, we will analyse the data gathered in order to answer our research question: Do increasing income inequalities cause stagnation in the economy and does increased income inequality make recovery from a crisis more difficult?