Has Widening Inequality Promoted or Retarded US Growth?

Gary Burtless

Canadian Public Policy, 2003, vol. 29, issue s1, pages 185-202

Abstract: The United States has recently enjoyed faster economic growth than any other large industrialized country. The US also has the highest level of inequality among the G7 countries and has seen inequality increase faster than most other industrialized nations. The combination of rapid American economic growth and high and rising US inequality raises a question: Has rising inequality contributed to rapid US economic growth? This paper reviews modern theories linking inequality and economic growth and concludes that a relatively old theory suggested by Arthur Okun probably accounts for the recent combination of US growth and inequality. The country imposes fewer restrictions on economic agents and provides less help to people in distress. It makes fewer sacrifices in efficiency to achieve economic equality. Okun's theory has little difficulty explaining why these distinctive policies are associated with faster employment growth and higher average hours of work than are observed in other wealthy countries.

Date: 2003
View list of references View citations in EconPapers

Downloads: (external link)
http://economics.ca/cgi/jab?journal=cpp&view=v29s1/CPPv29s1p185.pdf Full text (application/pdf)
No access restriction except for the four most recent issues.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: http://EconPapers.repec.org/RePEc:cpp:issued:v:29:y:2003:i:s1:p:185-202

Ordering information: This journal article can be ordered from
http://www.utpjournals.com/cpp/

Access Statistics for this article

Canadian Public Policy is edited by James B. Davies

More articles in Canadian Public Policy from University of Toronto Press
Address: University of Toronto Press Journals Division 5201 Dufferin Street Toronto, Ontario, Canada M3H 5T8
Series data maintained by Prof. Werner Antweiler ().