Financial Inclusion and Income Inequality Dynamics in European Economies (2000–2025, Forecast to 2035)

This study investigates the dynamic interplay between financial inclusion, inequality, and systemic risk across European economies from 2000 to 2035 using a stochastic diffusion framework. By integrating drift–diffusion modeling, Monte Carlo simulations, network transmission analysis, and scenario-based forecasting, we examine how financial, labor, and technological factors shape both the level and volatility of inequality. Empirical results indicate that higher financial inclusion consistently reduces mean inequality, dampens volatility, and enhances crisis resilience, while network centrality amplifies the propagation of shocks in high-volatility regions. Forecast scenarios highlight the asymmetric risk structure, showing that proactive digital finance and labor inclusion policies significantly mitigate extreme inequality outcomes. The study provides actionable policy insights for European financial integration, emphasizing that multi-pronged strategies combining digital finance, labor upskilling, and redistribution can stabilize inequality, enhance welfare, and reduce systemic risk.