Posted on February 26, 2014 by iMFdirect
By Jonathan D. Ostry and Andrew Berg
(Version in Français, Português, Русский, 中文)
Rising income inequality looms high on the global policy agenda, reflecting not only fears of its pernicious social and political effects, (including questions about the consistency of extreme inequality with democratic governance), but also the economic implications. While positive incentives are surely needed to reward work and innovation, excessive inequality is likely to undercut growth, for example by undermining access to health and education, causing investment-reducing political and economic instability, and thwarting the social consensus required to adjust in the face of major shocks.
Understandably, economists have been trying to understand better the links between rising inequality and the fragility of economic growth. Recent narratives include how inequality intensified the leverage and financial cycle, sowing the seeds of crisis; or how political-economy factors, especially the influence of the rich, allowed financial excess to balloon ahead of the crisis.
Filed under: Economic research, Employment, Financial Crisis, Financial regulation, Fiscal policy, growth, IMF, Inequality, International Monetary Fund | Tagged: education, income inequality, inequality, investment, research | 1 Comment »
Posted on September 23, 2013 by iMFdirect
(Versions in Español and عربي)
Hot off the press: a new study out today from our economists pointing to the striking economic benefits that could come from increased female participation in the work force.
IMF Chief Christine Lagarde, calling attention to the findings of the paper, “Women, Work, and the Economy,” made the case for policymakers to shift into high gear and give women equal opportunities to participate in the work force.
Filed under: Advanced Economies, Economic research, Emerging Markets, Employment, Globalization, IMF, Inequality, International Monetary Fund | Tagged: Christine Lagarde, employment, empowering women, income, income inequality, research, tax, women | 1 Comment »
Posted on September 14, 2011 by iMFdirect
By Jeremy Clift
We used to think that overall economic growth would pull everyone up. While the rich might be getting richer, everyone would benefit and would see higher living standards. That was the unspoken bargain of the market system.
But now research is showing that, in many countries, inequality is on the rise and the gap between the rich and the poor is widening, particularly over the past quarter-century.
With taxpayers footing the bill for troubles in the financial industry in advanced economies during the global economic crisis, this discrepancy seems particularly galling to wage-earners who have seen their pay stagnate or worse. Inequality has started to attract more research by economists.
The September 2011 issue of Finance & Development (F&D) looks at income inequality around the world and how it matters. Continue reading
Filed under: IMF, Inequality, International Monetary Fund | Tagged: Andrew Berg, bank bailouts, Branko Milanovic, economic growth, Finance & Development magazine, global economic crisis, income inequality, inequality, Jonathan Ostry, Paul Krugman, Prakash Loungani, rich and poor, unemployment | 3 Comments »
Posted on April 8, 2011 by iMFdirect
By Andrew G. Berg and Jonathan D. Ostry
Many of us have been struck by the huge increase in income inequality in the United States in the past thirty years. The rich have gotten much richer, while just about everyone else has had very modest income growth.
Some dismiss inequality and focus instead on overall growth—arguing, in effect, that a rising tide lifts all boats. But assume we have a thousand boats representing all the households in the United States, with boat length proportional to family income. In the late 1970s, the average boat was a 12 foot canoe and the biggest yacht was 250 feet long. Thirty years later, the average boat is a slightly roomier 15 footer, while the biggest yacht, at over 1100 feet, would dwarf the Titanic! When a handful of yachts become ocean liners while the rest remain lowly canoes, something is seriously amiss.
In fact, inequality matters. And it matters in all corners of the globe. Continue reading
Filed under: growth, Inequality, International Monetary Fund | Tagged: debt, economic growth, growth, income distribution, income inequality, inequality, macroeconomic stability, sustainable growth, trade openness | 41 Comments »