Income inequalities in selected countries according to economic systems

Abstract

Income inequality is a phenomenon influencing the dynamics of development processes. On the other hand, the problem of inequality is related to the economic system and the institutional order. The article deals with the relationship between inequalities and the economic system. The research objective of this study has been identified as determining the link between inequalities and the economic system. The article assumes a working hypothesis that the level and effectiveness of redistribution in each economic system of individual country is related to inequality. In the study of this problem, to realize the objective, the study on the relationship between elements of the economic system and the level of inequality was reviewed. The method of this analysis is qualitative and statistical description. Comparative analysis was made using statistical data on the level and dynamics of changes in inequalities and variables characterizing economic systems of analyzed countries. The study conducted in this paper confirms the hypothesis that the economic system influences economic inequalities in selected countries. In countries with higher redistribution, higher spending and taxes, the inequality level was lower. Interesting research conclusions concern the trends in changes in inequalities according to economic systems. In countries with a liberal tradition in the last decade there has been a significant decline in inequality. On contrary, in Sweden and Denmark, there was an increase in inequality. As a result, the distance separating these countries in terms of inequality has decreased. Besides, a relatively large drop in inequalities in Poland and a large increase in inequalityGermany were noted. As a result of these changes, the level of inequality in the final year of analysis was comparable.