;Income inequality is a widely concerned issue in most countries. Understanding the determinants of income inequality helps government propose effective policy measures to mitigate the degree of income inequality. This thesis utilizes a panel dataset of 61 countries for the 2004-2012 period to investigate determinants of income inequality by focusing on openness, innovation and institutional factors. To obtain robust estimates, we adopt both 20/20 ratio and 10/10 ratio as indicators of income inequality to conduct empirical estimations. Results obtained from the panel data model show that FDI and education help lower income inequality; GDP exhibits an inversed U shape relationship with income inequality. Moreover, both corruption and openness are associated with a positive relationship with the degree of income inequality. However, we find no significant relation between R&D and income inequality.
