Economic Growth and Inequality: Analyzing the Relationship Between Economic Growth, Income Inequality, and Social Mobility

Abstract

This paper examines the complex relationship between economic growth, income inequality, and social mobility using a mixed-methods approach incorporating both quantitative analysis of OECD data (2000-2024) and theoretical frameworks from development economics. The research question investigates whether economic growth necessarily leads to increased income inequality and reduced social mobility, or if policy interventions can decouple these relationships. Using panel data analysis and the Great Gatsby Curve framework, findings reveal a nuanced relationship where the quality and inclusiveness of growth matter more than growth rates alone. Results indicate that while rapid economic growth can exacerbate inequality in the short term, countries with strong institutional frameworks and redistributive policies maintain higher social mobility despite growth. The study contributes to understanding how policy design can harness economic growth while preserving social mobility and reducing inequality.