Income Inequality in Some Major European Union Economies a Discriminant Analysis

This exercise is an attempt to assess the importance of some social, economic, demographic and infrastructural factors which account for the prevailing income inequality across some of the EU countries. Using discriminant analysis the study suggests that crime recorded by police is the most important predictor in discriminating between the group of countries with relatively more equitable distribution of income from those with less. This variable is followed by number of students in the country. Reduction in the level of crime and improvement in the student strength could help in reducing income inequality. Quite intuitively, improvement in all the economic factors like GDP per capita and agricultural index will help to reduce income inequality. Identical is the case of the demographic factors. This calls for implementation of developmental policies towards improvement in these areas.