Impact of Economic Openness, Financial Inclusion, and Unemployment on Income Inequality in Asian Countries

Abstract

Inequalities within the society demonstrated to be traditionally, main reasons for conflicts between social classes, leading most of the time to strikes, riots, or even chaos or civil wars, all of which hinder the society's development. So, lessening the inequalities or at least controlling them is a subject for each country. Highlighting this issue, our work considers the role of urban population, financial inclusion, financial development, industrialization, economic openness, and unemployment rate in Asian countries. OLS results point out that urban population, foreign direct investment, and trade openness lead to a decrease the income inequality. However, financial inclusion, financial development, and unemployment rate have increased the unequal distribution of income in these Asian countries. The study suggests for more stable political and economic system for attracting more employment and foreign investments. Furthermore, there was also a need for an improved financial system for more provision of finance. The government should provide more jobs to the segments of the population to achieve high growth and development, and to lessen poverty.