Original scientific paper
https://doi.org/10.3935/rsp.v32i1.30
Drivers of Inequalities in the European Union
Mile Bošnjak
orcid.org/0000-0002-7663-198X
; Faculty of Economics and Business, University of Zagreb, Zagreb, Croatia
Ivan Novak
; Faculty of Economics and Business, University of Zagreb, Zagreb, Croatia
Branimir Cvitko Cicvarić
; Croatian Bank for Reconstruction and Development, Zagreb, Croatia
Abstract
This paper aims to examine the drivers of income inequalities in the European Union. Existing literature suggested a variety of determinants of income inequality. This paper takes into account uncertainty related to the selection of explanatory variables and follows the Bayesian model averaging approach while controlling heterogeneities in panel data by fixed effects specification. Following previous empirical findings and conditions by the availability of reliable data sources, 20 potential drivers of income inequality for 28 EU member countries between 2016 and 2019 were considered in this research. Empirical findings from this research pointed out financialization, human capital index, and adjusted wage share as the most prominent drivers of post-tax income inequality in the short run. Furthermore, the results suggested stabilizing effects of taxation on income inequalities in EU member countries.
Keywords
income inequality; European Union; data-driven model; Bayesian model averaging
Hrčak ID:
333911
URI
Publication date:
1.7.2025.
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