Inequality is Bad for Growth of the Poor (But Not for That of the Rich)

The paper assesses the impact of overall inequality, as well as inequality among the poor and among the rich, on the growth rates along various percentiles of the income distribution. The analysis uses micro-census data from U.S. states covering t...

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Main Authors:	van der Weide, Roy, Milanovic, Branko
Format:	Policy Research Working Paper
Language:	English en_US
Published:	World Bank Group, Washington, DC 2014
Subjects:	AGGREGATE INCOME ANNUAL GROWTH AVERAGE ANNUAL AVERAGE GROWTH AVERAGE GROWTH RATE AVERAGE INCOME AVERAGE INCOME GROWTH AVERAGE INCOMES CAPITAL ACCUMULATION CONFLICT CREDIT CONSTRAINT CREDIT CONSTRAINTS CREDIT MARKET CREDIT MARKET IMPERFECTIONS CROSS-COUNTRY ANALYSIS CROSS-COUNTRY DATA DATA AVAILABILITY DATA QUALITY DATA SETS DEPENDENT VARIABLE DEVELOPING COUNTRIES DEVELOPMENT ECONOMICS DEVELOPMENT POLICY DEVELOPMENT RESEARCH DISPOSABLE INCOME DISTRIBUTIVE POLITICS DYNAMIC PANEL ECONOMIC DEVELOPMENT ECONOMIC GROWTH ECONOMIC LITERATURE ECONOMIC REVIEW ECONOMIC STUDIES EFFECT OF INEQUALITY ON GROWTH EMPIRICAL EVIDENCE EMPIRICAL RESULTS EMPIRICAL STUDIES EMPIRICAL TEST ERROR TERM FINANCIAL CRISIS FIXED EFFECTS FIXED EFFECTS ESTIMATION FOREIGN AID GINI COEFFICIENT GROSS INCOME GROWTH LITERATURE GROWTH PATTERN GROWTH RATE GROWTH RATES GROWTH REGRESSION GROWTH REGRESSIONS GROWTH SPELLS GROWTH THEORIES GROWTH-INEQUALITY RELATIONSHIP HETEROGENEOUS COMMUNITIES HIGH INCOME COUNTRIES HIGH INEQUALITY HOUSEHOLD DATA HOUSEHOLD INCOME HOUSEHOLD MEMBERS HOUSEHOLD SIZE HOUSEHOLD SURVEYS HUMAN CAPITAL HUMAN CAPITAL ACCUMULATION INCOME INCOME DATA INCOME DISTRIBUTION INCOME DISTRIBUTIONS INCOME GROWTH INCOME INEQUALITY INCOME REDISTRIBUTION INDEPENDENT VARIABLES INEQUALITY INEQUALITY LEVELS INEQUALITY MEASURE INEQUALITY MEASURES INEQUALITY OF OPPORTUNITY INEQUALITY-GROWTH RELATIONSHIP INTERVENTIONS LABOR FORCE LEVELS OF INEQUALITY LOW INCOME LOW INEQUALITY MACROECONOMIC IMPLICATIONS MACROECONOMICS MARGINAL PROPENSITY MARGINAL TAX MARGINAL TAX RATE MARKET INCOME MEASURE OF INEQUALITY MEASURES OF INEQUALITY MEASURING INCOME INEQUALITY MEDIAN INCOME MEDIAN VOTER MEDIAN VOTER HYPOTHESIS MEMBER COUNTRIES MICRO DATA MIDDLE CLASS NEGATIVE COEFFICIENT NEGATIVE CORRELATION NEGATIVE EFFECT NEGATIVE IMPACT NEGATIVE RELATIONSHIP NEGATIVE SIGN NEW GROWTH THEORIES OVERALL INEQUALITY PENSIONS PER CAPITA GROWTH PER CAPITA GROWTH RATE PER CAPITA INCOME PER CAPITA INCOMES POINT DECLINE POLICY DISCUSSIONS POLICY RESEARCH POLITICAL ECONOMY POLITICAL INSTABILITY POLITICAL SCIENCE POOR GROWTH POSITIVE EFFECT POSITIVE IMPACT POSITIVE RELATIONSHIP PRO-POOR PRO-POOR GROWTH PROPERTY RIGHTS PUBLIC CHOICE PUBLIC ECONOMICS PUBLIC GOODS RATE OF GROWTH REAL GROWTH REAL INCOME REAL INCOMES REDISTRIBUTIVE POLICIES REGIONAL DUMMIES REGRESSION DIAGNOSTICS RESIDUAL INEQUALITY RICH COUNTRIES RISING INEQUALITY SAVINGS SENSITIVITY ANALYSIS SIGNIFICANT EFFECT SIGNIFICANT NEGATIVE SOCIAL SECURITY STANDARD DEVIATION TAXATION TOTAL INEQUALITY UNEMPLOYMENT UNEQUAL SOCIETIES WAGES WAR WORLD INCOME INEQUALITY
Online Access:	http://documents.worldbank.org/curated/en/2014/07/19756057/inequality-bad-growth-poor-not-rich http://hdl.handle.net/10986/19363

id	okr-10986-19363
recordtype	oai_dc
spelling	okr-10986-193632021-04-23T14:03:51Z Inequality is Bad for Growth of the Poor (But Not for That of the Rich) van der Weide, Roy Milanovic, Branko AGGREGATE INCOME ANNUAL GROWTH AVERAGE ANNUAL AVERAGE GROWTH AVERAGE GROWTH RATE AVERAGE INCOME AVERAGE INCOME GROWTH AVERAGE INCOMES CAPITAL ACCUMULATION CONFLICT CREDIT CONSTRAINT CREDIT CONSTRAINTS CREDIT MARKET CREDIT MARKET IMPERFECTIONS CROSS-COUNTRY ANALYSIS CROSS-COUNTRY DATA DATA AVAILABILITY DATA QUALITY DATA SETS DEPENDENT VARIABLE DEVELOPING COUNTRIES DEVELOPMENT ECONOMICS DEVELOPMENT POLICY DEVELOPMENT RESEARCH DISPOSABLE INCOME DISTRIBUTIVE POLITICS DYNAMIC PANEL ECONOMIC DEVELOPMENT ECONOMIC GROWTH ECONOMIC LITERATURE ECONOMIC REVIEW ECONOMIC STUDIES EFFECT OF INEQUALITY ON GROWTH EMPIRICAL EVIDENCE EMPIRICAL RESULTS EMPIRICAL STUDIES EMPIRICAL TEST ERROR TERM FINANCIAL CRISIS FIXED EFFECTS FIXED EFFECTS ESTIMATION FOREIGN AID GINI COEFFICIENT GROSS INCOME GROWTH LITERATURE GROWTH PATTERN GROWTH RATE GROWTH RATES GROWTH REGRESSION GROWTH REGRESSIONS GROWTH SPELLS GROWTH THEORIES GROWTH-INEQUALITY RELATIONSHIP HETEROGENEOUS COMMUNITIES HIGH INCOME COUNTRIES HIGH INEQUALITY HOUSEHOLD DATA HOUSEHOLD INCOME HOUSEHOLD MEMBERS HOUSEHOLD SIZE HOUSEHOLD SURVEYS HUMAN CAPITAL HUMAN CAPITAL ACCUMULATION INCOME INCOME DATA INCOME DISTRIBUTION INCOME DISTRIBUTIONS INCOME GROWTH INCOME INEQUALITY INCOME REDISTRIBUTION INDEPENDENT VARIABLES INEQUALITY INEQUALITY LEVELS INEQUALITY MEASURE INEQUALITY MEASURES INEQUALITY OF OPPORTUNITY INEQUALITY-GROWTH RELATIONSHIP INTERVENTIONS LABOR FORCE LEVELS OF INEQUALITY LOW INCOME LOW INEQUALITY MACROECONOMIC IMPLICATIONS MACROECONOMICS MARGINAL PROPENSITY MARGINAL TAX MARGINAL TAX RATE MARKET INCOME MEASURE OF INEQUALITY MEASURES OF INEQUALITY MEASURING INCOME INEQUALITY MEDIAN INCOME MEDIAN VOTER MEDIAN VOTER HYPOTHESIS MEMBER COUNTRIES MICRO DATA MIDDLE CLASS NEGATIVE COEFFICIENT NEGATIVE CORRELATION NEGATIVE EFFECT NEGATIVE IMPACT NEGATIVE RELATIONSHIP NEGATIVE SIGN NEW GROWTH THEORIES OVERALL INEQUALITY PENSIONS PER CAPITA GROWTH PER CAPITA GROWTH RATE PER CAPITA INCOME PER CAPITA INCOMES POINT DECLINE POLICY DISCUSSIONS POLICY RESEARCH POLITICAL ECONOMY POLITICAL INSTABILITY POLITICAL SCIENCE POOR GROWTH POSITIVE EFFECT POSITIVE IMPACT POSITIVE RELATIONSHIP PRO-POOR PRO-POOR GROWTH PROPERTY RIGHTS PUBLIC CHOICE PUBLIC ECONOMICS PUBLIC GOODS RATE OF GROWTH REAL GROWTH REAL INCOME REAL INCOMES REDISTRIBUTIVE POLICIES REGIONAL DUMMIES REGRESSION DIAGNOSTICS RESIDUAL INEQUALITY RICH COUNTRIES RISING INEQUALITY SAVINGS SENSITIVITY ANALYSIS SIGNIFICANT EFFECT SIGNIFICANT NEGATIVE SOCIAL SECURITY STANDARD DEVIATION TAXATION TOTAL INEQUALITY UNEMPLOYMENT UNEQUAL SOCIETIES WAGES WAR WORLD INCOME INEQUALITY The paper assesses the impact of overall inequality, as well as inequality among the poor and among the rich, on the growth rates along various percentiles of the income distribution. The analysis uses micro-census data from U.S. states covering the period from 1960 to 2010. The paper finds evidence that high levels of inequality reduce the income growth of the poor and, if anything, help the growth of the rich. When inequality is deconstructed into bottom and top inequality, the analysis finds that it is mostly top inequality that is holding back growth at the bottom. 2014-08-15T16:17:29Z 2014-08-15T16:17:29Z 2014-07 http://documents.worldbank.org/curated/en/2014/07/19756057/inequality-bad-growth-poor-not-rich http://hdl.handle.net/10986/19363 English en_US Policy Research Working Paper;No. 6963 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank Group, Washington, DC Publications & Research :: Policy Research Working Paper Publications & Research
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	English en_US
topic	AGGREGATE INCOME ANNUAL GROWTH AVERAGE ANNUAL AVERAGE GROWTH AVERAGE GROWTH RATE AVERAGE INCOME AVERAGE INCOME GROWTH AVERAGE INCOMES CAPITAL ACCUMULATION CONFLICT CREDIT CONSTRAINT CREDIT CONSTRAINTS CREDIT MARKET CREDIT MARKET IMPERFECTIONS CROSS-COUNTRY ANALYSIS CROSS-COUNTRY DATA DATA AVAILABILITY DATA QUALITY DATA SETS DEPENDENT VARIABLE DEVELOPING COUNTRIES DEVELOPMENT ECONOMICS DEVELOPMENT POLICY DEVELOPMENT RESEARCH DISPOSABLE INCOME DISTRIBUTIVE POLITICS DYNAMIC PANEL ECONOMIC DEVELOPMENT ECONOMIC GROWTH ECONOMIC LITERATURE ECONOMIC REVIEW ECONOMIC STUDIES EFFECT OF INEQUALITY ON GROWTH EMPIRICAL EVIDENCE EMPIRICAL RESULTS EMPIRICAL STUDIES EMPIRICAL TEST ERROR TERM FINANCIAL CRISIS FIXED EFFECTS FIXED EFFECTS ESTIMATION FOREIGN AID GINI COEFFICIENT GROSS INCOME GROWTH LITERATURE GROWTH PATTERN GROWTH RATE GROWTH RATES GROWTH REGRESSION GROWTH REGRESSIONS GROWTH SPELLS GROWTH THEORIES GROWTH-INEQUALITY RELATIONSHIP HETEROGENEOUS COMMUNITIES HIGH INCOME COUNTRIES HIGH INEQUALITY HOUSEHOLD DATA HOUSEHOLD INCOME HOUSEHOLD MEMBERS HOUSEHOLD SIZE HOUSEHOLD SURVEYS HUMAN CAPITAL HUMAN CAPITAL ACCUMULATION INCOME INCOME DATA INCOME DISTRIBUTION INCOME DISTRIBUTIONS INCOME GROWTH INCOME INEQUALITY INCOME REDISTRIBUTION INDEPENDENT VARIABLES INEQUALITY INEQUALITY LEVELS INEQUALITY MEASURE INEQUALITY MEASURES INEQUALITY OF OPPORTUNITY INEQUALITY-GROWTH RELATIONSHIP INTERVENTIONS LABOR FORCE LEVELS OF INEQUALITY LOW INCOME LOW INEQUALITY MACROECONOMIC IMPLICATIONS MACROECONOMICS MARGINAL PROPENSITY MARGINAL TAX MARGINAL TAX RATE MARKET INCOME MEASURE OF INEQUALITY MEASURES OF INEQUALITY MEASURING INCOME INEQUALITY MEDIAN INCOME MEDIAN VOTER MEDIAN VOTER HYPOTHESIS MEMBER COUNTRIES MICRO DATA MIDDLE CLASS NEGATIVE COEFFICIENT NEGATIVE CORRELATION NEGATIVE EFFECT NEGATIVE IMPACT NEGATIVE RELATIONSHIP NEGATIVE SIGN NEW GROWTH THEORIES OVERALL INEQUALITY PENSIONS PER CAPITA GROWTH PER CAPITA GROWTH RATE PER CAPITA INCOME PER CAPITA INCOMES POINT DECLINE POLICY DISCUSSIONS POLICY RESEARCH POLITICAL ECONOMY POLITICAL INSTABILITY POLITICAL SCIENCE POOR GROWTH POSITIVE EFFECT POSITIVE IMPACT POSITIVE RELATIONSHIP PRO-POOR PRO-POOR GROWTH PROPERTY RIGHTS PUBLIC CHOICE PUBLIC ECONOMICS PUBLIC GOODS RATE OF GROWTH REAL GROWTH REAL INCOME REAL INCOMES REDISTRIBUTIVE POLICIES REGIONAL DUMMIES REGRESSION DIAGNOSTICS RESIDUAL INEQUALITY RICH COUNTRIES RISING INEQUALITY SAVINGS SENSITIVITY ANALYSIS SIGNIFICANT EFFECT SIGNIFICANT NEGATIVE SOCIAL SECURITY STANDARD DEVIATION TAXATION TOTAL INEQUALITY UNEMPLOYMENT UNEQUAL SOCIETIES WAGES WAR WORLD INCOME INEQUALITY
spellingShingle	AGGREGATE INCOME ANNUAL GROWTH AVERAGE ANNUAL AVERAGE GROWTH AVERAGE GROWTH RATE AVERAGE INCOME AVERAGE INCOME GROWTH AVERAGE INCOMES CAPITAL ACCUMULATION CONFLICT CREDIT CONSTRAINT CREDIT CONSTRAINTS CREDIT MARKET CREDIT MARKET IMPERFECTIONS CROSS-COUNTRY ANALYSIS CROSS-COUNTRY DATA DATA AVAILABILITY DATA QUALITY DATA SETS DEPENDENT VARIABLE DEVELOPING COUNTRIES DEVELOPMENT ECONOMICS DEVELOPMENT POLICY DEVELOPMENT RESEARCH DISPOSABLE INCOME DISTRIBUTIVE POLITICS DYNAMIC PANEL ECONOMIC DEVELOPMENT ECONOMIC GROWTH ECONOMIC LITERATURE ECONOMIC REVIEW ECONOMIC STUDIES EFFECT OF INEQUALITY ON GROWTH EMPIRICAL EVIDENCE EMPIRICAL RESULTS EMPIRICAL STUDIES EMPIRICAL TEST ERROR TERM FINANCIAL CRISIS FIXED EFFECTS FIXED EFFECTS ESTIMATION FOREIGN AID GINI COEFFICIENT GROSS INCOME GROWTH LITERATURE GROWTH PATTERN GROWTH RATE GROWTH RATES GROWTH REGRESSION GROWTH REGRESSIONS GROWTH SPELLS GROWTH THEORIES GROWTH-INEQUALITY RELATIONSHIP HETEROGENEOUS COMMUNITIES HIGH INCOME COUNTRIES HIGH INEQUALITY HOUSEHOLD DATA HOUSEHOLD INCOME HOUSEHOLD MEMBERS HOUSEHOLD SIZE HOUSEHOLD SURVEYS HUMAN CAPITAL HUMAN CAPITAL ACCUMULATION INCOME INCOME DATA INCOME DISTRIBUTION INCOME DISTRIBUTIONS INCOME GROWTH INCOME INEQUALITY INCOME REDISTRIBUTION INDEPENDENT VARIABLES INEQUALITY INEQUALITY LEVELS INEQUALITY MEASURE INEQUALITY MEASURES INEQUALITY OF OPPORTUNITY INEQUALITY-GROWTH RELATIONSHIP INTERVENTIONS LABOR FORCE LEVELS OF INEQUALITY LOW INCOME LOW INEQUALITY MACROECONOMIC IMPLICATIONS MACROECONOMICS MARGINAL PROPENSITY MARGINAL TAX MARGINAL TAX RATE MARKET INCOME MEASURE OF INEQUALITY MEASURES OF INEQUALITY MEASURING INCOME INEQUALITY MEDIAN INCOME MEDIAN VOTER MEDIAN VOTER HYPOTHESIS MEMBER COUNTRIES MICRO DATA MIDDLE CLASS NEGATIVE COEFFICIENT NEGATIVE CORRELATION NEGATIVE EFFECT NEGATIVE IMPACT NEGATIVE RELATIONSHIP NEGATIVE SIGN NEW GROWTH THEORIES OVERALL INEQUALITY PENSIONS PER CAPITA GROWTH PER CAPITA GROWTH RATE PER CAPITA INCOME PER CAPITA INCOMES POINT DECLINE POLICY DISCUSSIONS POLICY RESEARCH POLITICAL ECONOMY POLITICAL INSTABILITY POLITICAL SCIENCE POOR GROWTH POSITIVE EFFECT POSITIVE IMPACT POSITIVE RELATIONSHIP PRO-POOR PRO-POOR GROWTH PROPERTY RIGHTS PUBLIC CHOICE PUBLIC ECONOMICS PUBLIC GOODS RATE OF GROWTH REAL GROWTH REAL INCOME REAL INCOMES REDISTRIBUTIVE POLICIES REGIONAL DUMMIES REGRESSION DIAGNOSTICS RESIDUAL INEQUALITY RICH COUNTRIES RISING INEQUALITY SAVINGS SENSITIVITY ANALYSIS SIGNIFICANT EFFECT SIGNIFICANT NEGATIVE SOCIAL SECURITY STANDARD DEVIATION TAXATION TOTAL INEQUALITY UNEMPLOYMENT UNEQUAL SOCIETIES WAGES WAR WORLD INCOME INEQUALITY van der Weide, Roy Milanovic, Branko Inequality is Bad for Growth of the Poor (But Not for That of the Rich)
relation	Policy Research Working Paper;No. 6963
description	The paper assesses the impact of overall inequality, as well as inequality among the poor and among the rich, on the growth rates along various percentiles of the income distribution. The analysis uses micro-census data from U.S. states covering the period from 1960 to 2010. The paper finds evidence that high levels of inequality reduce the income growth of the poor and, if anything, help the growth of the rich. When inequality is deconstructed into bottom and top inequality, the analysis finds that it is mostly top inequality that is holding back growth at the bottom.
format	Publications & Research :: Policy Research Working Paper
author	van der Weide, Roy Milanovic, Branko
author_facet	van der Weide, Roy Milanovic, Branko
author_sort	van der Weide, Roy
title	Inequality is Bad for Growth of the Poor (But Not for That of the Rich)
title_short	Inequality is Bad for Growth of the Poor (But Not for That of the Rich)
title_full	Inequality is Bad for Growth of the Poor (But Not for That of the Rich)
title_fullStr	Inequality is Bad for Growth of the Poor (But Not for That of the Rich)
title_full_unstemmed	Inequality is Bad for Growth of the Poor (But Not for That of the Rich)
title_sort	inequality is bad for growth of the poor (but not for that of the rich)
publisher	World Bank Group, Washington, DC
publishDate	2014
url	http://documents.worldbank.org/curated/en/2014/07/19756057/inequality-bad-growth-poor-not-rich http://hdl.handle.net/10986/19363
_version_	1764443719491125248

Inequality is Bad for Growth of the Poor (But Not for That of the Rich)

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