{"source_url": "https://www.oecd.org", "url": "https://www.oecd.org/newsroom/inequality-hurts-economic-growth.htm", "title": "Newsroom", "top_image": "https://www.oecd.org/media/oecdorg/styleassets/images/favicon/favicon.gif", "meta_img": "https://www.oecd.org/media/oecdorg/styleassets/images/favicon/favicon.gif", "images": ["https://www.oecd.org/media/oecdorg/styleassets/images/header/tools/socialicons/twitter.png", "https://www.oecd.org/media/oecdorg/styleassets/images/header/tools/socialicons/facebook.png", "https://www.oecd.org/media/oecdorg/styleassets/images/header/tools/socialicons/youtube.png", "https://www.oecd.org/media/oecdorg/styleassets/images/favicon/favicon.gif", "https://www.oecd.org/media/oecdorg/styleassets/images/header/logooecd_en.png", "https://www.oecd.org/media/oecdorg/styleassets/images/header/tools/socialicons/flickr.png", "https://www.oecd.org/media/oecdorg/styleassets/images/header/tools/socialicons/rss.png"], "movies": [], "text": "09/12/2014 - Reducing income inequality would boost economic growth, according to new OECD analysis. This work finds that countries where income inequality is decreasing grow faster than those with rising inequality.\n\nThe single biggest impact on growth is the widening gap between the lower middle class and poor households compared to the rest of society. Education is the key: a lack of investment in education by the poor is the main factor behind inequality hurting growth.\n\n\u201cThis compelling evidence proves that addressing high and growing inequality is critical to promote strong and sustained growth and needs to be at the centre of the policy debate,\u201d said OECD Secretary-General Angel Gurr\u00eda. \u201cCountries that promote equal opportunity for all from an early age are those that will grow and prosper.\u201d\n\nRising inequality is estimated to have knocked more than 10 percentage points off growth in Mexico and New Zealand over the past two decades up to the Great Recession. In Italy, the United Kingdom and the United States, the cumulative growth rate would have been six to nine percentage points higher had income disparities not widened, but also in Sweden, Finland and Norway, although from low levels. On the other hand, greater equality helped increase GDP per capita in Spain, France and Ireland prior to the crisis.\n\nThe paper finds new evidence that the main mechanism through which inequality affects growth is by undermining education opportunities for children from poor socio-economic backgrounds, lowering social mobility and hampering skills development.\n\nPeople whose parents have low levels of education see their educational outcomes deteriorate as income inequality rises. By contrast, there is little or no effect on people with middle or high levels of parental educational background.\n\nThe impact of inequality on growth stems from the gap between the bottom 40 percent with the rest of society, not just the poorest 10 percent. Anti-poverty programmes will not be enough, says the OECD. Cash transfers and increasing access to public services, such as high-quality education, training and healthcare, are an essential social investment to create greater equality of opportunities in the long run.\n\nThe paper also finds no evidence that redistributive policies, such as taxes and social benefits, harm economic growth, provided these policies are well designed, targeted and implemented.\n\nThe working paper, Trends in income inequality and its impact on economic growth, is part of the OECD\u2019s New Approaches to Economic Challenges Initiative, an Organisation-wide reflection on the roots and lessons to be learned from the global economic crisis, as well as an exercise to review and update its analytical frameworks.\n\nA four-page summary is available at www.oecd.org/social/inequality-and-poverty.htm\n\nMore information about OECD work on inequality: www.oecd.org/inequality.htm\n\nMore information about the OECD's New Approaches to Economic Challenges Initiative\n\nFor comment or further information, journalists should contact Stefano Scarpetta, OECD Director of Employment, Labour and Social Affairs, (tel. + 33 1 45 24 19 88) or Michael F\u00f6rster (tel. + 33 1 45 24 92 80) of the OECD\u2019s Social Policy division or Federico Cingano (tel. + 33 1 45 24 94 75) of the OECD's Employment Analysis and Policy Division.\n\nAlso Available", "keywords": [], "meta_keywords": ["inequality", "income", "gap"], "tags": [], "authors": [], "publish_date": null, "summary": "", "article_html": "", "meta_description": "Information for journalists, Reducing income inequality would boost economic growth, according to new OECD analysis. This work finds that countries with lower income inequality grow faster than those with higher inequality.", "meta_lang": "en", "meta_favicon": "/media/oecdorg/styleassets/images/favicon/favicon.gif", "meta_data": {"title": "Inequality hurts economic growth, finds OECD research", "description": "Information for journalists, Reducing income inequality would boost economic growth, according to new OECD analysis. This work finds that countries with lower income inequality grow faster than those with higher inequality.", "keywords": "inequality, income, gap"}, "canonical_link": ""}