Growth, Inequality and Negative Trickle Down

Daphne Greenwood and Richard Holt

Journal of Economic Issues, 2010, vol. 44, issue 2, 403-410

Abstract: Neoliberal theory rationalizes inequality as both 1) necessary for growth and 2) offset by a trickle down to lower income groups. However, benefits from income growth failed to reach most of the population for the last several decades in the United States. Instead, a negative trickle down has lowered many people's wellbeing. The first aspect of negative trickle down is a new form of Veblen's conspicuous consumption with positional goods. The second is the effect on the provision of public goods. The third is the competition for limited resources, such as housing. We review how greater income inequality contributes to each.

Date: 2010
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DOI: 10.2753/JEI0021-3624440212

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