THE EFFECT OF SOCIAL EXPENDITURES ON INCOME INEQUALITY IN POST-SOCIALIST AND CAPITALIST COUNTRIES: A PANEL DATA ANALYSIS

Throughout the history of economics, income inequality has been one of the most debated issues. Since the 1990s, the issue of income inequality and welfare segregation has grown increasingly important for countries' economies around the world. One of the most important ways for the government to directly regulate income inequality is through social expenditure. The impact of government social spending on income inequality in selected European nations was explored in this study by examining social benefits and their impact on the Gini indices. On the one hand, post-socialist nations that have undergone transition, and on the other hand, capitalist countries that have never been under the social regime have been picked to be evaluated. Based on the obtained results, government social spending has a positive impact on income disparity for the post-socialist countries i.e. when the government spends more on social programs, income disparity decreases. The findings for the capitalist countries are inconclusive.

/