The Role of Entrepreneurship on Income Inequality in Developing Countries

Income inequality in developing countries is still at an undesirable level and needs urgent attention. Theoretically, if entrepreneurship is aggressively promoted and opportunities are offered to the hardcore poor or less fortunate candidates, less income inequality can be seen in the long run. Therefore, the objective of this study is to analyze the effectiveness of entrepreneurship in reducing income inequality in developing countries. This study uses a sample of 47 developing countries for the period from 2009 to 2017. Generalized Method of Moments (GMM) is utilized, and the key findings of the study reveal that increasing the level of entrepreneurship will decrease income inequality levels in developing countries. One possible solution is for governments to offer various schemes targeting the poor so that the hardcore poor can be brought out of poverty.

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