Tetiana Vasylieva

Sumy State University, Ukraine;

Silesian University of Technology, Poland; The London Academy of Science and Business, UK

E-mail: tavasilyeva@biem.sumdu.edu.ua

ORCID 0000-0003-0635-7978

Economic development and income inequality: Role in country resistance to COVID-19

Alina Vysochyna

Sumy State University, Ukraine

E-mail: a.vysochyna@uabs.sumdu.edu.ua ORCID 0000-0001-9490-1026

Bálint Filep

Széchenyi István University,

Győr, Hungary

E-mail: filep.balint@sze.hu

ORCID 0000-0003-3955-6818

Abstract. The pandemic of coronavirus disease (COVID-19) significantly slowed economic development and exacerbated income inequality. However, the scale of this destructive influence varies considerably among countries. Thus, the purpose of this study is to identify changes in causality patterns between economic development and income inequality due to COVID-19. To fulfill the task, an Index of Economic Development (IED) is developed using the multivariate analysis tools, Cronbach's alpha and the Fishburn formula. The Gini index was chosen as a core proxy of social inequality. The research covers a sample of 15 European countries. The period of the analysis is 2000-2021. A set of regression equations are constructed to determine the relationship between economic development and income inequality in the studied countries. A dummy variable is integrated into the equation to determine the impact of the coronavirus disease (COVID-19). Modeling is carried out on the panel data. The most acceptable functional form of the regression model is clarified based on the Hausman test. Modeling results make it possible to identify patterns of changes in the impact of income inequality on economic development, and vice versa. The change in their causality due to COVID-19 is substantiated.

Received: December, 2021

1st Revision: August, 2022

Accepted: November, 2022

DOI: 10.14254/2071-789X.2022/15-4/14

JEL Classification: E24, E31, F32, I18, O47

Keywords: economic development, income inequality, COVID-19, coronavirus disease, country resistance