Estimation of the effect of Income Inequality on Human Development: A Cross Sectional Study

Throughout history, there has been overwhelming evidence that high levels of economic inequality correlate with low levels of human development, measured by the human development index. Our group’s overall objective was to observe the effect of income inequality on human development levels by compiling Gini coefficient and Human Development Index statistics on 78 randomly selected countries from across the world. We ultimately found that the gini index predominantly has a strong positive relationship with the human development index ,but more so in developed countries than in developing nations. This is mainly due to the fact that globalization effects have not fully reached all of these countries’ populations; as a result, these populations are still transitioning out of abject poverty and therefore have low levels of economic inequality. In addition, after running additional variables, including urban population, pollution levels, GDP Growth, external debt to gdp ratio, and index of economic freedom, we find that there are differences in significance with these variables with respect to their impacts on human development levels