Does redistribution hurt growth? An Empirical Assessment of the Redistribution-Growth Relationship in the European Union

Michael Christl, Silvia De Poli and Monika Köppl-Turyna (monika.koeppl-turyna@ecoaustria.ac.at)
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Monika Köppl-Turyna: ECO Austria
Authors registered in the RePEc Author Service: Monika Irena Köppl-Turyna

No 668, Working Papers from ECINEQ, Society for the Study of Economic Inequality

Abstract: This paper analyzes the relation between economic growth, inequality and redistribution. In a cross-country setting for 25 EU countries over the period between 2007 and 2019, we show that market-income inequality is related to higher growth in the short term. To estimate the impact of redistribution to low-income earners, we introduce a new measure, the so called net benefit share (NBS). Contrary to other findings, we show that this (targeted) redistribution to low-income earners (Q1 NBS) fosters growth in the short term, driven by the consumption and private investment channel. On the other hand, untargeted redistribution towards higher-income earners reduces growth.

Keywords: growth; redistribution; inequality; European Union (search for similar items in EconPapers)
JEL-codes: D63 H23 O47 (search for similar items in EconPapers)
Pages: 35 pages
Date: 2024-03
New Economics Papers: this item is included in nep-eec and nep-pbe
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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http://www.ecineq.org/milano/WP/ECINEQ2024-668.pdf First version, 2024 (application/pdf)

Related works:
Working Paper: Does redistribution hurt growth? An empirical assessment of the redistribution-growth relationship in the European Union (2024)
Working Paper: Does redistribution hurt growth? An Empirical Assessment of the Redistribution-Growth Relationship in the European Union (2024)
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