The Impact of Economic Growth, Education Level, and Inflation Rate on Income Inequality in Malaysia

Abstract

The goal of this study is to look at the determinants that contribute to income inequality in Malaysia.Methodology: The time series spans the years 1990 -2019, with 30 observations. The empirical findings of this study were obtained using three important econometrics tests through E-views software: Augmented Dickey-Fuller (ADF) test and Phillips-Perron (PP) test, the JJ Cointegration test, and the Vector Error Correction Model (VECM) test.Expected Findings: The result reveals that economic growth, education level, and inflation rate have long-run and short-run relationships with income inequality in Malaysia. Practical Implications: The government needs to implement and introduce new ways and solutions in increasing and enhancing the quality of the education system that could aid in reducing the country's income inequality.Originality/Value: Findings of this study will assist the government and policymakers in determining the major drivers that are beneficial in reducing income inequality.