Taxonomic Analysis of Income Inequality in the EU Countries

Abstract

The problem of population economic inequality is an actual issue for all countries of the world, but the peculiarity of economic inequality in EU countries lies in the differentiation of non-labor incomes received from property ownership, and also in the uneven distribution of residential and commercial real estate. Therefore, the analysis of population economic inequality in the EU countries is an urgent scientific and practical task. The purpose of this study was to determine the degree of economic inequality and the optimal rate of population income differentiation in the EU countries, and to develop measures based on this to reduce the degree of property inequality in the countries of this region. To achieve the goal, the taxonomy method was used, as well as general scientific methods (dialectics, analysis, synthesis, induction, deduction). For the quantitative description of the obtained results, the Harrington factor-criterion scale was used, which made it possible to divide 27 EU countries into three groups (clusters): countries with a high degree of economic inequality (Bulgaria, Latvia, Lithuania); countries with an average degree of economic inequality (Austria, Belgium, Greece, Spain, Italy, Cyprus, Luxembourg, Germany, Poland, Portugal, Romania, Hungary, Croatia, Finland, France, Sweden); countries with a low degree of economic inequality (Denmark, Estonia, Ireland, Malta, the Netherlands, Slovakia, Slovenia, the Czech Republic). To reduce the population economic inequality in the countries of the third group, the following measures have been proposed: stimulation of domestic and foreign investments; ensuring a high return on financial assets at the state level; creating more favorable conditions for the development of industry and increasing the wages of workers at the industrial enterprises. The obtained results have scientific and practical value on how to improve the economic policy of the countries of Northern and Eastern Europe and can be used in further theoretical researches on problems of population economic inequality in the countries of this region and for the specification of applied measures to reduce economic inequality in Bulgaria, Latvia and Lithuania.