Should Policymakers Care Whether Inequality Is Helpful or Harmful For Growth?

Much cross-country research has found a negative relationship of inequality for growth, although results are not uniform

• Some of the early contributions were Alesina and Rodrik (1994) and Persson and Tabellini (1994). Many more surveyed in Cingano (2014) and Boushey and Price (2014).

• Widely cited recent contributions by researchers at the IMF and OECD including Berg, Ostry and Zettelmeyer (2012) on growth spells, Ostry, Berg and Tsangarides (2014) on growth and OECD (2015) for OECD economies.

• Barro (2000) finds inequality is bad for growth in low-income countries and good for growth in high-income countries. Brückner and Lederman (2015) find the reverse.

• A number of papers have found no clear relationship (Furman and Stiglitz 1998), a negative relationship (Forbes 2000), different relationships at different time horizons (Halter, Oechslin, and Zweimüller 2014), or different relationships at different parts of the income distribution (Voitchovsky 2005).

– Harvard Kennedy School, Peterson Institute for International Economics

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