Must-Read: John Schmitt: OECD: Income Inequality Hampers Growth

Must-Read: John Schmitt: OECD: Income Inequality Hampers Growth: “‘Econometric analysis suggests that income inequality has…

…a sizeable and statistically significant negative impact on growth.’… Between 1990 and 2010 gross domestic product per person in 19 core OECD countries grew by a total of 28 percent, but would have grown by 33 percent over the same period if inequality had not increased…. Lowering inequality by just one ‘Gini-point’ (a standard measure of inequality used by economists) would raise the annual growth rate of GDP by 0.15 percentage points. In a world where policies that boost growth rates by one or two tenths of a percent per year are a big deal, these kinds of outcomes are at the high end of what we can reasonably hope from most policy interventions…. The OECD believes that inequalities in access to education are the most important factor behind the connection between inequality and growth…

June 9, 2015

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