Inequality and Unsustainable Growth: Two Sides of the Same Coin?
Staff Discussion Notes, April 8, 2011
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- Inequality and Unsustainable Growth: Two Sides of the Same Coin?
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Bibliographic details
- Authors: Jonathan David Ostry, Andrew Berg
- Published: April 8, 2011
- Series: Staff Discussion Notes
- DOI: https://doi.org/10.5089/9781463926564.006
Summary and purpose
- Raises the IMF’s profile on issues related to inequality, unemployment, governance, etc.
- Builds on earlier empirical work that examined correlations between growth downbreaks/duration of growth spells and a range of macro/policy/institutional factors.
- Designed to be more accessible, more policy oriented, and focused squarely on the issue of inequality and the sustainability of growth.
- References literature that gained prominence in the wake of the global crisis and possible links between the crisis and rising inequality in countries at the epicenter of the crisis.
- Connects analytical findings to real world policy narratives in certain countries to provide texture to the results and enhance policy relevance.
Key analytical findings
- The paper argues 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, as these can have strong disincentive effects.
- The analysis builds on correlations between growth downbreaks/duration of growth spells and macro/policy/institutional factors (as in earlier empirical work referenced by the note).
Policy discussion and recommendations
- Policy discussion is appropriately cautious and offers only tentative ideas.
- Examples of tentative policy ideas include:
- Active labor market policies.
- More attention to human capital investments designed to avoid conflicts between efficiency and equity perspectives.
- Emphasizes avoiding broad redistributive policies that may have strong disincentive effects, while pursuing policies that reconcile efficiency and equity.
Subject areas and keywords
- Subject: Income distribution, Income inequality, National accounts, Personal income, Poverty, Poverty reduction strategy
- Keywords: a number of country, Asia and Pacific, distribution channel, FDI inflow, financial crisis, Global, growth spell, Income distribution, Income inequality, income inequality database, inequality-reducing policy, market economy, Middle East, Personal income, policy conclusion, policy implication, policy inaction, Poverty reduction strategy, real GDP, SDN, state repression, structural adjustment, Sub-Saharan Africa, sustainable growth, wider World income inequality database
Content in this bundle
- _sdn1108 - Executive Summary