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Breaking the Vicious Circle of Inequality and Unproductivity: Lessons from International Evidence

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  • Eduardo Lora

    (Fedesarrollo)

Abstract

Inequality and low productivity are statistically correlated in Colombia and around the world, suggesting the existence of a vicious circle between both problems. Against this background, this paper reviews the theory and international empirical evidence in order to identify the possible common causes of both phenomena. The article focuses on the policy variables that have the most robust effects on income distribution and productivity in developing countries, namely: (i) early formation of cognitive and non-cognitive skills, (ii) fiscal policies focused on direct taxes and targeted transfers, (iii) financial inclusion, and (iv) competition policies. On this basis, strategies are proposed to break the vicious circle of inequality and unproductivity in Colombia.

Suggested Citation

  • Eduardo Lora, 2024. "Breaking the Vicious Circle of Inequality and Unproductivity: Lessons from International Evidence," Lecturas de Economía, Universidad de Antioquia, Departamento de Economía, issue 102, pages 133-163, November.
    • Handle: RePEc:lde:journl:y:2024:i:102:p:133-163
    DOI: 10.17533/udea.le.n102a354958
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    Keywords

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    JEL classification:

    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration

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