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Redistribution, inequality, and growth: new evidence

Author

Listed:
  • Andrew Berg

    (International Monetary Fund)

  • Jonathan D. Ostry

    (International Monetary Fund)

  • Charalambos G. Tsangarides

    (International Monetary Fund)

  • Yorbol Yakhshilikov

    (International Monetary Fund)

Abstract

We investigate the relationship between inequality, redistribution, and growth using a recently-compiled dataset that distinguishes clearly between market (pre-tax and transfer) and net (post tax and transfer) inequality, and allows us to calculate redistributive transfers for a large number of advanced and developing countries. Across a variety of estimation methods, data samples, and robustness checks, we find: (1) lower net inequality is robustly correlated with faster and more durable growth, controlling for the level of redistribution; (2) redistribution appears benign in terms of its impact on growth, except when it is extensive; and (3) inequality seems to affect growth through human capital accumulation and fertility channels.

Suggested Citation

  • Andrew Berg & Jonathan D. Ostry & Charalambos G. Tsangarides & Yorbol Yakhshilikov, 2018. "Redistribution, inequality, and growth: new evidence," Journal of Economic Growth, Springer, vol. 23(3), pages 259-305, September.
  • Handle: RePEc:kap:jecgro:v:23:y:2018:i:3:d:10.1007_s10887-017-9150-2
    DOI: 10.1007/s10887-017-9150-2
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    More about this item

    Keywords

    Growth; Inequality; Redistribution; Cross country analysis;
    All these keywords.

    JEL classification:

    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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