INCOME INEQUALITY AND POVERTY IN THE EUROPEAN UNION: CAUSES AND CONSEQUENCES - DNSEU
Project “DNSEU” is implemented within the framework of the National Recovery and Resilience Plan 2021–2026 and is financed by European Union funds through the NextGenerationEU instrument.
DNSEU’s first year
The institutional research project Income Inequalities and Poverty in the European Union: Causes and Consequences (DNSEU) has completed the first of its four project years. Running at the Faculty of Economics & Business, University of Zagreb since 1 October 2025 under Call IIP-581-2025, the project asks which factors shape income inequality and poverty across EU member states, and how.
The starting point is simple: the literature offers dozens of candidate drivers of inequality but no consensus on which ones actually matter, and conventional empirical approaches easily fall into the traps of omitted variables or over-parameterisation. The team therefore applies Bayesian model averaging (BMA), a method that systematically weighs a large number of possible specifications and identifies the factors that remain robust regardless of model choice.
In the first year the team assembled a harmonised panel of 25 EU member states for 2013–2021 and specified and tested the first models. The results, robust to alternative prior choices, show that corruption increases income inequality within EU member states, while trade openness, access to financial services and the unemployment rate emerge as further relevant determinants with theoretically consistent effects.
The findings were presented at two international conferences. At the 54th EBES Conference in Paris (IESEG School of Management, 8–10 January 2026), Associate Professors Ivan Novak and Mile Bošnjak presented The Price of Corruption: Its Impact on Income Disparity Across the European Union. At the 2nd International Scientific Jean Monnet Conference “Empowering Europe’s Future through Education” (Zagreb, 22–23 January 2026) the team presented Does Financial Deepening Fuel Inequality? Evidence from European Credit Cycles.
In the second project year the team continues work on the remaining models and manuscripts, extending the analysis to poverty and to further dimensions of heterogeneity across EU member states. The project aims to publish four papers in journals indexed in Web of Science and Scopus by the end of its term.
Research team: Associate professor Ivan Novak (principal investigator), Associate professor Mile Bošnjak, Full professor Davor Filipović, Full professor Gordana Kordić, Assistant professor Marija Jurčević.
The DNSEU project is implemented under the National Recovery and Resilience Plan 2021–2026. Funded by the European Union – NextGenerationEU. Views and opinions expressed are those of the authors only and do not necessarily reflect those of the European Union or the European Commission. Neither the European Union nor the European Commission can be held responsible for them.