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Social Policy and Productivity Growth: What are the Linkages?

In: The Review of Economic Performance and Social Progress 2002: Towards a Social Understanding of Productivity


  • Richard G. Harris

    (Telus Professor of Economics, Simon Fraser University and Fellow of the Canadian Institute of Advanced Research)


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.

Suggested Citation

  • Richard G. Harris, 2002. "Social Policy and Productivity Growth: What are the Linkages?," The Review of Economic Performance and Social Progress,in: Andrew Sharpe, Executive Director & France St-Hilaire, Vice-President , Research & Keith Banting, Di (ed.), The Review of Economic Performance and Social Progress 2002: Towards a Social Understanding of Productivity, volume 2 Centre for the Study of Living Standards;The Institutute for Research on Public Policy.
  • Handle: RePEc:sls:repsls:v:2:y:2002:rh

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    Cited by:

    1. Andrew Sharpe, 2004. "Exploring the Linkages between Productivity and Social Development in Market Economies," CSLS Research Reports 2004-02, Centre for the Study of Living Standards.

    More about this item


    Equity; Efficiency; Productivity; Labour Productivity; Labor Productivity; Growth; Income; Inequality; Equality; Social Policy; Education; Health; Welfare; Redistribution; Social Cohesion; Cohesion; Investment; Innovation; Competition; Living Standards;

    JEL classification:

    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies 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, Well-Being, 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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