Is Inequality Harmful for Growth?
1993 (English)Report (Other academic)
Is inequality harmful for growth? We suggest that it is. In a society where distributional conflict is important, political decisions produce economic policies that tax investment and growth promoting activities in order to redistribute income. The paper formulates a theoretical model that captures this idea. The model implications are supported by the evidence. Both historical panel data and post-war cross sectionc indicate a significant and large negative relation between inequality and growth. This relation is only present in democracies.
Place, publisher, year, edition, pages
Stockholm: IIES , 1993. , 44 p.
Seminar Paper / Institute for International Economic Studies, Stockholm University, ISSN 0347-8769 ; 537
IdentifiersURN: urn:nbn:se:su:diva-41857OAI: oai:DiVA.org:su-41857DiVA: diva2:338002