The relationship between income distribution and human development: The Case of OECD countries

Income distribution in society is of great importance. It affects the unity of society and determines the level of poverty for any given level of GDP. Income distribution is expressed as the sharing of the income arising in the current period in a country's economy among individuals, groups and production elements. One of the most fundamental questions of economics is how to distribute resources. This question has been asked since classical economists. When resources are not divided fairly, some unrest may occur in society. This may disturb the general peace. Therefore, it is of vital importance to determine the inequality in income distribution. There are many factors affecting income distribution such as economic growth, population growth, interest, wealth distribution, social structure, educational status, technological developments. Hence, the factors determining income distribution for each country may differ from each other or the effects of factors may differ from each other. Nations determine their own destiny with the wealth they possess. This is important for both the current generation and future generations. The Human Development Index is a composite index of three different dimensions. Its components reflect the three main dimensions of human development: longevity, knowledge and access to resources. Since 1990, the United Nations Development Programme has published a series of annual Human Development Reports from which a human development index is calculated for each country. The purpose of the specific focus chosen by the Human Development Reports is to examine progress in human living conditions, i.e. the ability of people to maintain a lifestyle that they have reason to value. This study analyses the relationship between income distribution and human development of OECD countries between 2004 and 2021. Panel data analysis is used in the study. In this study, it is concluded that a more equitable distribution of income leads to an improvement in the Human Development Index.