Summary of Redistribution, Inequality, and Growth

IMF Staff Discussion Note


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Redistribution, Inequality, and Growth summary
Driving new economic growth will require reducing income inequality, according to this IMF report.


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While the subject of income inequality gains headlines, real answers to the problem crash headlong into voters’ aversion to more taxes and bigger government. But economists at the International Monetary Fund take a practical look at new data that indicate the possibility of win-win solutions in addressing inequity while spurring growth. getAbstract recommends this timely investigation into the relationships among government redistribution, income inequality and economic growth to executives, policy makers and economists.

In this summary, you will learn

  • How inequality, growth and redistribution relate to one other;
  • How levels of inequality have changed since the 1980s;
  • Why reducing inequality spurs economic growth; and
  • Why redistribution doesn’t negatively affect growth in most instances.


Traditional thinking about income inequality and economic growth presupposes a trade-off: Measures to reduce inequity, such as higher taxes on the rich and subsidies to the poor, might lessen each group’s motivation to work, resulting in some loss of economic activity. But research has yet to verify...
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About the Authors

Jonathan D. Ostry, Andrew Berg and Charalambos G. Tsangarides are IMF economists.

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