Wealth Inequality and Economic Growth: An Empirical Analysis and the Concept of State Financial Regulation

This study examines the relationship between wealth inequality and economic growth. The paper models the impact of wealth concentration on long-term economic growth rates, accounting for economic, social, and institutional factors across groups of countries with different income levels. The resulting estimates are then interpreted economically. The study assesses the transition from income inequality to wealth inequality, as well as the relationships between growth, human capital quality, the level of development of financial institutions, and the intensity of budget redistribution. The article identifies priorities for managing economic inequality and specific instruments for public financial regulation, focusing on fiscal policy measures. A number of recommendations are developed to ensure a balance between economic growth and wealth inequality in Russia. The econometric analysis is conducted using OLS models with fixed effects and control variables. The dependent variable is the 10-year moving average of annual growth rates of real GDP per capita at PPP, and the key independent variable is the Gini coefficient for net wealth. Modeling estimates indicate heterogeneity in the relationship between wealth inequality and economic growth. Overall, an increase in the Gini coefficient leads to a persistent decline in average GDP growth, but in a country-specific analysis, the negative impact of high wealth concentration is most pronounced in the least developed economies. Parameters of institutional and economic development influence the association between high disposable income inequality and higher economic growth, and their effects increase at higher levels of per capita GDP. The principle of state financial regulation recommends prioritizing the curbing of wealth inequality over income inequality during the country's economic development. Russia, in turn, should implement a balancing policy that aims to mitigate the negative effects of wealth inequality through fiscal decentralization, modernization of inheritance and personal property taxation, and stimulation of economic growth through the redistribution of investment in human capital, increasing stock market capitalization, and improving the quality of public administration.