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Journal of Economic Integration 2024 June;39(2) :296-318.
DOI: https://doi.org/10.11130/jei.2024015
The Inflation-Inequality Connection in the European Union: U-Turn to Equity?

Mahmut Zeki Akarsu 1 and Orkideh Gharehgozli 2

1University of Warsaw, Warsaw, Poland
2Montclair State University, Montclair, USA
Corresponding Author: Mahmut Zeki Akarsu ,Email: m.akarsu@uw.edu.pl
Copyright ©2024 Journal of Economic Integration
ABSTRACT
In this study, we delve into the complex relationship between inflation and inequality in the European Union from 1990 to 2019. Specifically, we explore the non-linear nature of this relationship, uncover turning points, and reveal the distinctive U-shape of the relationship be- tween the two indicators. Our research also uncovers some striking findings: first, we discover that sales taxes disproportionately harm households and drive up inequality, and second, we find that income tax policies are very effective at reducing inequality in Western European countries, while they are substantially less effective in Eastern European countries with lower income tax rates.

JEL Classification
D60: General
O40: General
052:
Keywords: inflation | inequality | European Union
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