Does redistribution hurt growth? An empirical assessment of the redistribution-growth relationship in the European Union

Monika Köppl-Turyna, Michael Christl and Silvia De Poli

No 27, Research Papers from EcoAustria – Institute for Economic Research

Abstract: This paper analyzes the relationship between economic growth, inequality and redistribution. In a cross-country setting for 25 EU countries over the period 2007-2019, we show that market income inequality is associated with higher growth in the short run. 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) boosts growth in the short run, driven by the consumption and private investment channels. On the other hand, untargeted redistribution to 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)
Date: 2024
New Economics Papers: this item is included in nep-eec
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Citations: View citations in EconPapers (1)

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https://www.econstor.eu/bitstream/10419/285354/1/1882659961.pdf (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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Persistent link: https://EconPapers.repec.org/RePEc:zbw:ecoarp:285354

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