Abstract
Income inequality has, in recent years, become a serious issue especially in emerging markets. This paper examines the relationship of income inequality in the Asia-Pacific and Latin America regions to several factors such as gross capital formation, corruption, and per capita gross domestic product (GDP). Using a cross-sectional dataset of 36 countries from both regions for the year 2018 and ordinary least squares regression, the paper shows that gross capital formation and the lack of corruption have a negative and significant relationship with income inequality (as represented by the Gini coefficient). In contrast, per capita GDP has a positive and significant relationship with income inequality. Policymakers who want to rein in income inequality should therefore focus on ways to reduce corruption and increase the formation of capital. This study could be of use for those who are interested in discovering and mitigating the factors that cause income inequality in the developing world.