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Study Shows Income Inequality Severely Hampers Economic Growth

By Tanya Somanader  

"Study Shows Income Inequality Severely Hampers Economic Growth"

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Income inequality in the U.S. is higher than at any other time since the Great Depression, and the U.S. is currently more unequal than countries like the Ivory Coast, Ethiopia, and Pakistan. Though Republicans dismiss concerns over the gap as “class warfare,” the ever-increasing level of disparity has tangible consequences, leading to poor work performance and a greater gap in life expectancy. And now, according to a new Finance & Development study, income inequality also “kills economic growth.” Looking at how to sustain economic growth, the research found that “making an economy’s income distribution 10 percent more equitable prolongs its typical growth spell by 50 percent”:

Mother Jones’ Josh Harkinson noted that this lesson is nothing new, pointing to Depression-era Federal Reserve Chairman Marriner Eccles, who “blamed the Great Crash on the nation’s wealth gap.”

‹ Conservative Economist: ‘Regulatory Uncertainty Is A Canard Invented By Republicans’

Econ 101: October 5, 2011 ›

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