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<p>This paper explores the implications of the poverty-growth-inequality trilemma at the European Union (EU) level by observing 26 state members over the period 2000 to 2019. We draw upon the novel Generalized Method of Moments-panel Vector Autoregression (GMM-PVAR) approach that captures the dynamic influences that GDP growth and absolute poverty simultaneously exert on income inequality while coping with potential endogeneity concerns. Also, the impulse-response functions (IRFs) along with the causality analyses facilitate the visualization of factors’ interactions over time. Our cumulated results show that permanent positive changes in output and poverty levels stimulate current and future increases in inequality among EU members. To counteract long-term disparities, social and cohesion policies should target absolute poverty reduction. These findings are robust to several additional tests, but sensitive to countries’ level of development, macroeconomic background and policy changes, supporting tailored strategies for distinct European sub-groups.</p>

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The future of income inequality in the European Union: Do economic growth and poverty matter?

  • 期刊论文

  • 发表日期：

    2026年3月30日

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  • Teodora Mădălina Pop

摘要

This paper explores the implications of the poverty-growth-inequality trilemma at the European Union (EU) level by observing 26 state members over the period 2000 to 2019. We draw upon the novel Generalized Method of Moments-panel Vector Autoregression (GMM-PVAR) approach that captures the dynamic influences that GDP growth and absolute poverty simultaneously exert on income inequality while coping with potential endogeneity concerns. Also, the impulse-response functions (IRFs) along with the causality analyses facilitate the visualization of factors’ interactions over time. Our cumulated results show that permanent positive changes in output and poverty levels stimulate current and future increases in inequality among EU members. To counteract long-term disparities, social and cohesion policies should target absolute poverty reduction. These findings are robust to several additional tests, but sensitive to countries’ level of development, macroeconomic background and policy changes, supporting tailored strategies for distinct European sub-groups.