Multidimensional inequality, social cohesion, and economic growth

This study delves into the intricate linkages among multidimensional inequality, social cohesion, and economic growth. In addition to Gini-coefficient, different indices of inequality of opportunities constructed through a multidimensional approach of decomposing income inequality into inequality of circumstances and inequality of efforts have been used as measures of inequality. We have employed Two-Stage Least Square as well as Three-Stage Least Square for our empirical analysis. The findings reveal that inequality of circumstances adversely affects economic growth through its negative effects on social cohesion. Furthermore, social cohesion exerts direct as well as indirect positive and significant effects on economic growth. The positive and significant effects of social cohesion on economic growth work through its positive effects on investment. Societies entangled with higher inequality of circumstances tend to be less cohesive and have lower economic growth, underscoring the significance of addressing the issue of inequality of circumstances.