Income Inequalities in Capitalistic and Socialistic Economies: “An empirical evidence from capitalistic and socialistic countries


  • Malik Saqib Ali Assistant Professor, Department of Economics NUML, Islamabad
  • Shabana Kauser Lecturer, Department of Economics NUML, Islamabad
  • Muhammad Sakhi Lecturer, Qaraqurum International University, Hunza Campus



Income inequalities, Government Revenues, Economic growth Capitalism, Socialism


Income inequality undesirably affects the living standards of the people in the different parts of the world. The main objective of the paper is to find out the intensity of income inequality in capitalistic and socialistic economies in the world. The study helps to explore the empirical evidence that how income inequality impacts the life of the people under the umbrella of concurrent economic systems. The study is based on the panel data set. The Generalized Method of Movements (GMM) is applied and the results depict that Government revenues are inversely associated with income inequality in both economic systems. It happens because government expenditures in an account of social safety nets result in a decline in income inequality. On the other side, economic growth, and employment ratio hold a positive connection with income inequality under the parasol of socialism and capitalism. This research reveals that both systems are deficient to mitigate income inequality and leave the space for a new and balanced economic system.