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Inequality and Unsustainable Growth: Two Sides of the Same Coin?

Author/Editor: Jonathan David Ostry | Andrew Berg
Electronic Access: Free Full Text (PDF file size is 576KB)
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Summary: This note raises the IMF’s profile on a number of issues related to inequality, unemployment, governance, etc. It builds on earlier empirical work that examined correlations between growth downbreaks/duration of growth spells and a range of macro/policy/institutional factors. This paper is designed to be more accessible, more policy oriented, and focused squarely on the issue of inequality and the sustainability of growth. It will reference the literature that has gained prominence in the wake of the global crisis, and the possible links between the crisis and rising inequality in countries at the epicenter of the crisis. The analytical findings will also be connected to real world policy narratives in certain countries, to provide texture to the results and enhance policy relevance. The paper will argue that, based on the empirical findings, more equality in the income distribution is associated with longer-lived growth spells. Broad redistributive policies are not necessarily pro-growth, however, as these can have strong disincentive effects. The paper’s policy discussion is appropriately cautious, therefore, offering only tentative ideas, for example, active labor market policies and more attention to human capital investments designed to avoid conflicts between efficiency and equity perspectives.
 
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Series: Staff Discussion Notes No. 11/8
Subject(s): Income distribution | Developed countries | Developing countries | Economic growth | Emerging markets | Poverty reduction
Author's keyword(s): Income distribution; sustainable growth
 
English  
    Published:   April 8, 2011        
    ISBN/ISSN:   9781463926564   Format:   Paper
    Stock No:   SDNEA2011008   Pages:   20
    Price:   US$10.00        
English  
    Published:   April 8, 2011        
    ISBN/ISSN:   978-1-61635-138-0   Format:   A web quality merged PDF
    Stock No:   SDNET2011008   Pages:   20
    Price:   Free        
     
Academic Rate: US$10.00
Please address any questions about this title to publications@imf.org.