Abstract:Is inequality harmful for growth? We suggest that it is. In a society where distributional conflict is important, political decisions produce economic policies that tax investment and growth promoting...Is inequality harmful for growth? We suggest that it is. In a society where distributional conflict is important, political decisions produce economic policies that tax investment and growth promoting activities in order to redistribute income. The paper formulates a theoretical model that captures this idea. The model implications are supported by the evidence. Both historical panel data and post-war cross sectionc indicate a significant and large negative relation between inequality and growth. This relation is only present in democracies.Read More
Publication Year: 1994
Publication Date: 1994-01-01
Language: en
Type: book
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Cited By Count: 2365
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