Inequality, growth and welfare: The main links
Joel Hellier and
No 258, Working Papers from ECINEQ, Society for the Study of Economic Inequality
We review the literature on the links between inequality, growth and welfare. Three questions are addressed: 1) What is the impact of growth and development on inequality? 2) What is the impact of inequality on growth, development and welfare? 3) What is the impact of proequality public policies upon growth and welfare? As regards the first question, the theoretical and empirical literature that analyses Kuznets hypothesis is firstly reviewed. The answer to the question of the impact of inequality on growth is twofold. Firstly, inequality fosters growth when this is based on capital accumulation, but it hinders growth when growth is based on human capital accumulation and when inequality-related social disturbances are considered. Identically, pro-equality public policies may engender very different effects upon growth depending on their influence on factor accumulation. These mixed impacts may explain the ambiguous findings provided by the empirical literature. If most of the estimates carried out in the 1990s seemed to confirm that inequality was damaging for growth, the 2000s empirical literature reconsiders this diagnosis but remains inconclusive.
Keywords: Inequality; Growth; Welfare. (search for similar items in EconPapers)
JEL-codes: D31 D63 I38 O15 O4 (search for similar items in EconPapers)
Pages: 36 pages
New Economics Papers: this item is included in nep-fdg and nep-pbe
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Chapter: Inequality, Growth and Welfare: The Main Links (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:inq:inqwps:ecineq2012-258
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