## Growth-Equity Trade-offs in Structural Reforms

_IMF Working Papers, January 5, 2018_

## Source details

**Canonical URL:** [Growth-Equity Trade-offs in Structural Reforms](https://www.imf.org/en/publications/wp/issues/2018/01/05/growth-equity-trade-offs-in-structural-reforms-45540)

## Other formats

- [Markdown version](/en/publications/wp/issues/2018/01/05/growth-equity-trade-offs-in-structural-reforms-45540/index.md)
- [Structured JSON version](/en/publications/wp/issues/2018/01/05/growth-equity-trade-offs-in-structural-reforms-45540/index.json)
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## Bibliographic details
- Authors: Jonathan David Ostry, Andrew Berg, Siddharth Kothari
- Published: January 5, 2018
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781484336809.001

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### Main findings
- 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.

### Quantitative interaction between growth and inequality
- 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.

### Robustness, coverage, and data limitations
- 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.

### Policy implications and interpretation
- 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.

*IMF Working Paper by Jonathan David Ostry, Andrew Berg, Siddharth Kothari (January 5, 2018).*

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## Content in this bundle

- **Appendix I: Reforms Data**
  - [Appendix I: Reforms Data (Markdown version)](/-/media/files/publications/wp/2018/wp1805.pdf.md){rel="alternate" type="text/markdown"}
  - [Appendix I: Reforms Data (PDF)](/-/media/files/publications/wp/2018/wp1805.pdf){rel="external" type="application/pdf"}

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_Source: https://www.imf.org/en/publications/wp/issues/2018/01/05/growth-equity-trade-offs-in-structural-reforms-45540_