Inequality and Growth

Lane Kenworthy, a scholar of inequality issues, has started a new blog called consider the evidence. This post considers some of the evidence on the alleged link between high levels of inequality and economic growth: not much evidence for it.

Comments

OK, Kenworthy's analysis is a cross-sectional, not a time-series analysis. It doesn't answer the question of "Does an increase in growth lead to an increase in inequality?", because it doesn't control for country-level or state-level fixed effects. To really answer this question, we'd need to look at each country at two different points in time.

For the record, I think such a regression would also find no significant relationship. But if you restricted the sample to OECD countries post-1975, I think you might find a relationship, since so much growth in rich countries seems to come from the financial sector lately.

Posted by Mr. Noah | December 15, 2007 4:11 PM

I don't care about inequality if the poorest among us have a reasonable standard of living, and they certainly do here in the US.

I care about injustice, crime, terrorism and a state that will destroy wealth creation to pursue some foolish notion of equality.

Equality, like its bastard twin "diversity" is not an end in itself that is worthy of any effort or waste of resources

Posted by Jozef | December 16, 2007 10:46 AM

Equality aside, any conversation about negative aspects of indiscriminate economic growth should be grounded in a thorough understanding of exponential growth. Check out the short video clip, "Are Humans Smarter Than Yeast?."

Posted by Akonitum | December 16, 2007 2:43 PM