Richard G. Harris (Telus Professor of Economics, Simon Fraser University and Fellow of the Canadian Institute of Advanced Research)
Abstract
In this chapter, Richard Harris points out that a traditional view has been that there is an inherent conflict between economic efficiency and social equality, a view neatly summarized in the title of Okun's famous book, Equality and Efficiency: The Big Trade-off (1975). This view gained renewed currency in the policy debates of the 1990s, as commentators contrasted the economic performance of Europe and the U.S. in that decade. This view has been challenged both by cross-national empirical studies and by theoretical advances. Recent research seems to suggest that there is no efficiency-equity trade-off and that social policy and greater equality may actually contribute to higher productivity growth. Richard Harris surveys two streams of recent research that point in this direction. The chapter also examines new theoretical literature, especially the new endogenous growth theory that suggests that increases in inequality can hurt growth.
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ReDIF This chapter was published in: Andrew Sharpe, Executive Director & France St-Hilaire, Vice-President , Research & Keith Banting, Director (ed.) The Review of Economic Performance and Social Progress 2002: Towards a Social Understanding of Productivity, Centre for the Study of Living Standards, 2002.
Find related papers by JEL classification: O47 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Measurement of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity I38 - Health, Education, and Welfare - - Welfare and Poverty - - - Government Programs; Provision and Effects of Welfare Programs H51 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Health H52 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Education D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
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