Economic Inequality and Public Policy Interventions for Inclusive Growth

Abstract

Economic inequality is one of the significant issues in inclusive and sustainable economic growth due to limited access to income, jobs, education, health care, and financing. This study will analyze the link between economic inequality, public policies, and inclusive growth through an integrated analysis framework. Three indices will be developed as part of this study: the Economic Inequality Index (EII), Public Policy Intervention Index (PPII), and Inclusive Growth Index (IGI). Fiscal redistribution, human capital development, employment and wages policies, social protection, and financial and digital inclusion are some of the main public policy dimensions analyzed in this framework. Comparisons of these indicators will be carried out for advanced, emerging, and developing countries with hypothetical values in order to illustrate the proposed framework. Findings indicate that advanced economies achieve the lowest value for EII at 32.5 and the highest PPII at 82.0, whereas developing economies achieve the highest EII of 56.7 and the lowest PPII at 51.0. IGI is at its peak among advanced economies, with a value of 84.5; emerging economies have an IGI of 68.0, while developing economies have an IGI of 51.5. The results show a positive relationship between increased public policy intervention and inclusive growth performance. The study emphasizes the need for coordinated policies which will focus on redistribution and the development of human capital, employment creation, social security, and financial inclusion.