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The Impact of Income Inequality on Economic Growth. Bertelsmann Impulse # 2015/05

Petersen, Thieß and Schoof, Ulrich (2015) The Impact of Income Inequality on Economic Growth. Bertelsmann Impulse # 2015/05. UNSPECIFIED.

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    Increases in income inequality have both growth-promoting effects (stronger performance incentives, as well as incentives to invest in one’s own human capital, to take risks, and to make investments) and growth-dampening effects (demotivating incentives, social tensions and political unrest, declines in demand as a brake on growth). While increases in income inequality in the 1950s and the 1960s still led to growth-promoting effects, current studies increasingly identify growth-dampening effects. Particularly in highly developed economies such as Germany, Japan and the United States, these studies indicate that increasing income inequality has reached a level that is becoming a brake on growth. For this reason, there is no fundamental contradiction between state-led income redistribution and economic growth. The reduction of income inequality should not be limited to a pure redistribution through the tax-transfer system, but should also include a rebalancing of the supply-side policies of the past 30 years.

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    Item Type: Other
    Subjects for non-EU documents: EU policies and themes > Policies & related activities > economic and financial affairs > economic growth
    Subjects for EU documents: UNSPECIFIED
    EU Series and Periodicals: UNSPECIFIED
    EU Annual Reports: UNSPECIFIED
    Series: Series > Bertelsmann Stiftung/Foundation (Gutersloh, Germany) > Impulse
    Depositing User: Phil Wilkin
    Official EU Document: No
    Language: English
    Date Deposited: 25 Oct 2019 12:28
    Number of Pages: 12
    Last Modified: 25 Oct 2019 12:28

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