Updated: Nov 21, 2021
Speaking of the relationship between income inequality and economic growth, I wonder whether rapid economic growth necessarily leads to inequality and whether the latter, in turn, hurts economic growth. My google searches generated diverse, sometimes opposing views, highlighting the complexity and difficulty in understanding this topic.
Some believe that “high levels of inequality reduce growth in relatively poor countries but encourage growth in richer countries.”
Some think that “inequality is slowing US economic growth.” (https://www.epi.org/publication/secular-stagnation)
OECD seconded this opinion with its study showing “Inequality hurts economic growth,” not only in the US.
There are also those who regard inequality as a good thing up to a certain point, exceeding which its impact on the economy would be adverse.
Finally there is the argument that “changes in inequality do not influence growth, neither in the short run nor in the long run in the United States as a whole in the 1929–2013 period.” (https://onlinelibrary.wiley.com/doi/abs/10.1111/ecin.12475)
Today, with so much data collected on daily basis, and analytical tools being constantly sharpened and advanced, I hope quicker and more accurate analysis can be achieved, helping formulate policies that are effective in both promoting growth and narrowing the income gap.