The impact of income inequality on economic growth
"Increases in income inequality have both growth-promoting effects (stronger performance incentives, as well as incentives to invest in one’s own human capital, to take risks, and to make investments) and growth-dampening effects (demotivating incentives, social tensions and political unrest, d...
| Main Authors: | , |
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| Institution: | ETUI-European Trade Union Institute |
| Format: | TEXT |
| Language: | English |
| Published: |
Gütersloh
2015
Bertelsmann Stiftung |
| Subjects: | |
| Online Access: | https://www.labourline.org/KENTIKA-19100773124919289559-The-impact-of-income-inequalit.htm |
| Summary: | "Increases in income inequality have both growth-promoting effects (stronger performance incentives, as well as incentives to invest in one’s own human capital, to take risks, and to make investments) and growth-dampening effects (demotivating incentives, social tensions and political unrest, declines in demand as a brake on growth). While increases in income inequality in the 1950s and the 1960s still led to growth-promoting effects, current studies increasingly identify growth-dampening effects. Particularly in highly developed economies such as Germany, Japan and the United States, these studies indicate that increasing income inequality has reached a level that is becoming a brake on growth. For this reason, there is no fundamental contradiction between state-led income redistribution and economic growth. The reduction of income inequality should not be limited to a pure redistribution through the tax-transfer system, but should also include a rebalancing of the supply-side policies of the past 30 years." |
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| Physical Description: | 12 p. Digital |