THE IMPACT OF INCOME INEQUALITY ON ECONOMIC GROWTH: Evidence from U.S. State-Level Panel Data (1998–2018)

This study investigates the relationship between income inequality and economic growth across U.S. states using panel data from 1998 to 2018. Economic growth is measured using real Gross State Product (GSP) per capita, while income inequality is captured using the Gini coefficient. Applying fixed-effects regression analysis, the findings reveal a statistically significant and positive association between income inequality and economic output, while unemployment exhibits a negative effect on growth. These results align with studies suggesting that, in high-income regions like the United States, income disparity may spur economic expansion. Limitations and avenues for further research are discussed, including the influence of additional socioeconomic and demographic factors not included in the model.