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Myroslava SOLOGUB


Introduction. Problems of inequality have been at the center of attention among world economists for some time now. According to the new concept of the World Bank, existing social inequality is a factor that has a significant impact on subsequent economic growth, and there is a critical value of inequality that determines the direction of such an impact - positive or negative. High income inequality (above a critical level) hinders economic growth and the progressive transformation of institutions, and economic growth would be more dynamic and sustainable, institutional transformations would be more effective if the state, along with economic modernization and innovative development, pursued a policy of fair redistribution of income, which would ensure the reduction of inequality in society to a socially acceptable level.

Purpose. The purpose of the study is to show that the deviation of inequality indicators, in particular the Gini index, from the critical (optimal) value leads to a significant slowdown in economic growth.

Results. The study proposes a mathematical model created on the basis of production - institutional functions, which allows you to calculate the critical (optimal) curve of inequality in society, as well as the gap between potential and actual volumes of output.

Originality. The study presents a mathematical model for analyzing the impact of inequality on economic growth, in which the exponential trend operator was replaced by a logistic one, which makes the model more sustainable in the long run. In addition, the model takes into account labor-saving Harrod-neutral technological progress, which is a key production factor in developed economies.

Conclusions. The implementation of the presented model confirms the conclusions of fundamental research that deviations of the actual values of the inequality index in both directions from the optimal curve equally reduce output. The analysis was carried out for the economies of 16 OECD countries and the results indicate losses in output from 0.3% to 3.7%, which are associated precisely with the deviation of the actual indicators of the level of inequality from optimal values.

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