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Redistribution, inequality, and growth: new evidence

Andrew Berg (), Jonathan Ostry (), Charalambos Tsangarides () and Yorbol Yakhshilikov ()

Journal of Economic Growth, 2018, vol. 23, issue 3, No 1, 259-305

Abstract: Abstract We investigate the relationship between inequality, redistribution, and growth using a recently-compiled dataset that distinguishes clearly between market (pre-tax and transfer) and net (post tax and transfer) inequality, and allows us to calculate redistributive transfers for a large number of advanced and developing countries. Across a variety of estimation methods, data samples, and robustness checks, we find: (1) lower net inequality is robustly correlated with faster and more durable growth, controlling for the level of redistribution; (2) redistribution appears benign in terms of its impact on growth, except when it is extensive; and (3) inequality seems to affect growth through human capital accumulation and fertility channels.

Keywords: Growth; Inequality; Redistribution; Cross country analysis (search for similar items in EconPapers)
JEL-codes: O11 O15 O40 (search for similar items in EconPapers)
Date: 2018
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DOI: 10.1007/s10887-017-9150-2

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