Financial Regulation of Household Poverty and Income Inequality: ESG Sustainability and Effectiveness of Social Security Systems

The results of the study yield conclusions indicating a negative correlation between technological progress and income inequality dynamics. Innovations have an entirely positive impact on the dynamics of income development, improving key macroeconomic indicators of a country. Thus, the collective of authors has experimentally demonstrated that the hypothesis of the role of technological progress in increasing inequality is controversial and possibly false. This conclusion deserves special attention as it starkly contrasts with findings from earlier works on modeling. In the study, authors made progress toward conducting an experiment to test various tax regimes and the introduction of a progressive tax system on income and wealth to regulate inequality among households. In the new version of the model, the government plays a much more active role and adjusts the tax burden on income and wealth for households in each period. The experimental results on changes in tax regimes lead to the conclusion that a progressive tax system is an effective tool for reducing economic inequality in income and wealth and contributes to more sustainable economic growth. The authors highlight the particular practical significance of this finding. The sustained growth of economic inequality in several countries over the past few decades may be associated with the decreasing progressiveness of tax rates in the global economy since the 1980s. The construction of an effective financial-investment model for social security provision is crucial in addressing the pressing issues of poverty and income inequality within the population. The complexity and interconnectedness of socioeconomic factors make it challenging to develop comprehensive models that accurately capture the dynamics of social security systems. Poverty and income inequality continue to be significant challenges faced by societies worldwide.