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Inequality and Unsustainable Growth: Two Sides of the Same Coin?

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  • Andrew G. Berg

    () (International Monetary Fund)

  • Jonathan D. Ostry

    () (International Monetary Fund)

Abstract

Abstract The relationship between income inequality and economic growth is complex and the evidence mixed. This paper focuses on the connections between income inequality and the fragility of economic growth. We find that longer growth spells—periods of strong, healthy, per capita growth—are robustly associated with more equality in the income distribution, even when controlling for a range of other standard determinants. A key implication is that it would be a gamble to think that distribution will take care of itself provided policy makers steadfastly pursue growth. Over longer horizons, avoiding excessive inequality and sustaining economic growth may be two sides of the same coin.

Suggested Citation

  • Andrew G. Berg & Jonathan D. Ostry, 2017. "Inequality and Unsustainable Growth: Two Sides of the Same Coin?," IMF Economic Review, Palgrave Macmillan;International Monetary Fund, vol. 65(4), pages 792-815, November.
  • Handle: RePEc:pal:imfecr:v:65:y:2017:i:4:d:10.1057_s41308-017-0030-8
    DOI: 10.1057/s41308-017-0030-8
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    Citations

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    Cited by:

    1. Thorvaldur Gylfason, 2019. "Inequality Undermines Democracy and Growth," CESifo Working Paper Series 7486, CESifo.
    2. Fabio Clementi & Mauro Gallegati & Lisa Gianmoena & Simone Landini & Joseph E. Stiglitz, 2019. "Mis-measurement of inequality: a critical reflection and new insights," Journal of Economic Interaction and Coordination, Springer;Society for Economic Science with Heterogeneous Interacting Agents, vol. 14(4), pages 891-921, December.
    3. José De Gregorio, 2018. "Productivity in Emerging Market Economies: Slowdown or Stagnation?," Working Papers wp471, University of Chile, Department of Economics.
    4. Gil-Alana, Luis A. & Škare, Marinko & Pržiklas-Družeta, Romina, 2019. "Measuring inequality persistence in OECD 1963–2008 using fractional integration and cointegration," The Quarterly Review of Economics and Finance, Elsevier, vol. 72(C), pages 65-72.
    5. Herr, Hansjörg & Dünhaupt, Petra, 2019. "Global Value Chains in economic development," IPE Working Papers 124/2019, Berlin School of Economics and Law, Institute for International Political Economy (IPE).
    6. Thorvaldur Gylfason, 2018. "Ten Years After: Iceland's Unfinished Business," CESifo Working Paper Series 7318, CESifo.
    7. Nicholas Apergis & Christina Christou & Rangan Gupta & Stephen M. Miller, 2018. "Convergence in Income Inequality: Further Evidence from the Club Clustering Methodology across States in the U.S," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 24(2), pages 147-161, May.
    8. ThorvaldurGylfason, 2019. "From Equality, Democracy, and Public Health to Economic Prosperity," ifo DICE Report, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 17(02), pages 28-33, August.
    9. Anping Chen & Nicolaas Groenewold, 2019. "Macroeconomic shocks in China: Do the distributional effects depend on the regional source?," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 62(1), pages 69-97, February.
    10. Herr, Hansjörg, 2018. "Underdevelopment and unregulated markets: Seven reasons why unregulated markets reproduce underdevelopment," IPE Working Papers 103/2018, Berlin School of Economics and Law, Institute for International Political Economy (IPE).

    More about this item

    Keywords

    O1; O4;

    JEL classification:

    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity

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