| Abstract [eng] |
This thesis examines how the relationship between income inequality and economic growth changes under the influence of digital transformation and institutional quality in the European Union. The study is based on several economic theories, including Kuznets’s inverted-U hypothesis, Kaldor’s saving and capital-formation argument, Barro’s conditional view, and Castells’ theory of the digital network. These theories suggest that the inequality-growth nexus is not fixed., but depends on broader economic, institutional, and technological conditions. While many studies have examined the inequality, growth, digital transformation and institutional quality separately, fewer studies analyse whether digital transformation and institutional quality moderate the effect of inequality on growth. This thesis addresses this gap by treating institutional quality and digital transformation as key factors that may reshape the nexus. The empirical analysis is based on a panel data for 27 EU member states over the period 2010- 2023. Economic growth is measured by annual GDP per capita growth, inequality by Gini index, while digital transformation and institutional quality are measured using composite indices. The findings show that income inequality has a negative effect on economic growth, however, this effect depends on the digital and institutional environment in which it occurs. Specifically, institutional quality weakens the negative inequality-growth nexus, while digital transformation appears to strengthen it when digital benefits are unequally distributed. The joint moderation results further show that this nexus also depends on the interaction between institutional conditions and digital transformation. |
