Summary of Causes and Consequences of Income Inequality

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Causes and Consequences of Income Inequality summary
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Differing income levels can have a positive impact on an economy when people’s desire to move up the financial ladder provides incentives to work and innovate. But when it becomes too pronounced, income inequality can have harmful economic consequences. This breakthrough research from International Monetary Fund economists Era Dabla-Norris, Kalpana Kochhar, Nujin Suphaphiphat, Frantisek Ricka, Evridiki Tsounta extends the scope of past income inequality studies across many more developed and developing countries to offer ideas that can foster growth while narrowing the gap between rich and poor. getAbstract recommends this authoritative work to executives, economists and policy makers.

About the Authors

Era Dabla-Norris, Kalpana Kochhar, Nujin Suphaphiphat, Frantisek Ricka and Evridiki Tsounta are economists at the International Monetary Fund.



“Widening income inequality is the defining challenge of our time.” Income inequality limits educational and occupational choices, concentrates political power among the few, and inhibits social mobility. But beyond these social concerns, pronounced income inequality also has broad economic implications, especially for growth: When the richest 20% of the population gains an incremental income share of one percentage point, GDP growth slows by 0.08 percentage points over the next five years. But GDP growth rises 0.38 percentage points in the same ...

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