The Effect of Absorption of Knowledge Spillover on Income Inequality in Selected Science Producing Countries

Income inequality is one of the significant topics of the economy. Its increase not only causes political instability in societies but also is a major barrier to increasing growth and continuous and stable economic progress. The income distribution means the existing inequality in the share of different people of a country from the national income. In the present study, the income share of the top ten percent of the national income (the income share of the top decile) was used as an index of income inequality.  The present study investigates the interactive effect of knowledge spillover absorption and economic freedom on the income inequality of selected science-producing countries. For this purpose, two groups of selected science-producing countries with a per capita income of more than thirty thousand dollars and the selected science-producing countries with a per capita income of less than thirty thousand dollars during 2000-2020 were used using panel data and GMM methods.  The estimation results showed that the interaction of knowledge spillover absorption and economic freedom positively and significantly affects income inequality in selected science-producing countries with a per capita income of more than thirty thousand dollars.  Also, in these countries, the coefficients of knowledge spillover absorption, information, and communication infrastructure, and domestic research and development were positive, non-significant, and negative, respectively. However, the interaction of absorption of knowledge spillover and economic freedom negatively and significantly affected the income inequality in selected science-producing countries with per capita income of less than thirty thousand dollars. Additionally, in this group of countries, the coefficient of the knowledge spillover absorption and information and communication infrastructures variables was negative, and the coefficient of the domestic research and development variable was positive.