{
  "title": "Growth-Equity Trade-offs in Structural Reforms",
  "publication": "IMF Working Papers, January 5, 2018",
  "sourceUrl": "https://www.imf.org/en/publications/wp/issues/2018/01/05/growth-equity-trade-offs-in-structural-reforms-45540",
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  "summary": "Do structural reforms that aim to boost potential output also change the distribution of income? We shed light on this question by looking at the broad patterns in the cross-country data covering advanced, emerging-market, and low-income countries.",
  "sections": [
    {
      "heading": "Main findings",
      "content": "- There is evidence of a growth-equity tradeoff for some important structural reforms.\n- Financial and capital account liberalization seem to increase both growth and inequality.\n- Some measures of liberalization of current account transactions also appear to increase both growth and inequality.\n- Reforms aimed at strengthening the impartiality of and adherence to the legal system entail no growth-equity tradeoff—these reforms are good for growth and do not worsen inequality.\n- Results for the index of network reforms and the measure of decentralization of collective labor bargaining are the weakest and least robust, potentially due to data limitations."
    },
    {
      "heading": "Quantitative interaction between growth and inequality",
      "content": "- When some structural reforms worsen inequality, higher inequality dampens the growth benefits from those reforms.\n- Despite this dampening effect, the net effect on growth remains positive for most reform indicators."
    },
    {
      "heading": "Robustness, coverage, and data limitations",
      "content": "- Analysis covers cross-country data across advanced, emerging-market, and low-income countries.\n- Weak and less robust results are noted for network reforms and decentralization of collective labor bargaining, with potential attribution to data limitations."
    },
    {
      "heading": "Policy implications and interpretation",
      "content": "- Policymakers should weigh potential distributional consequences when designing reforms that liberalize financial, capital account, and certain current account transactions.\n- Strengthening the impartiality of and adherence to the legal system can be pursued without a tradeoff against inequality.\n- Even when reforms raise inequality, the positive net growth effect for most reform indicators implies that complementary policies addressing distributional impacts may be warranted to share gains more broadly.\n\nIMF Working Paper by Jonathan David Ostry, Andrew Berg, Siddharth Kothari (January 5, 2018).\n\n---\n\n Content in this bundle\n\n- Appendix I: Reforms Data\n  - Appendix I: Reforms Data (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Appendix I: Reforms Data (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/wp/issues/2018/01/05/growth-equity-trade-offs-in-structural-reforms-45540"
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    "Authors: Jonathan David Ostry, Andrew Berg, Siddharth Kothari",
    "Published: January 5, 2018",
    "Series: IMF Working Papers",
    "DOI: https://doi.org/10.5089/9781484336809.001",
    "There is evidence of a growth-equity tradeoff for some important structural reforms.",
    "Financial and capital account liberalization seem to increase both growth and inequality.",
    "Some measures of liberalization of current account transactions also appear to increase both growth and inequality.",
    "Reforms aimed at strengthening the impartiality of and adherence to the legal system entail no growth-equity tradeoff—these reforms are good for growth and do not worsen inequality.",
    "Results for the index of network reforms and the measure of decentralization of collective labor bargaining are the weakest and least robust, potentially due to data limitations.",
    "When some structural reforms worsen inequality, higher inequality dampens the growth benefits from those reforms.",
    "Despite this dampening effect, the net effect on growth remains positive for most reform indicators.",
    "Analysis covers cross-country data across advanced, emerging-market, and low-income countries.",
    "Weak and less robust results are noted for network reforms and decentralization of collective labor bargaining, with potential attribution to data limitations.",
    "Policymakers should weigh potential distributional consequences when designing reforms that liberalize financial, capital account, and certain current account transactions.",
    "Strengthening the impartiality of and adherence to the legal system can be pursued without a tradeoff against inequality.",
    "Even when reforms raise inequality, the positive net growth effect for most reform indicators implies that complementary policies addressing distributional impacts may be warranted to share gains more broadly.",
    "**Appendix I: Reforms Data**"
  ],
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