Autor institucional : | FMI |
Autor/Autores: | Era Dabla-Norris, Kalpana Kochhar, Frantisek Ricka, Nujin Suphaphiphat and Evridiki Tsounta |
Fecha de publicación: | Junio 2015 |
Alcance geográfico: | Mundial |
Publicado en: | Estados Unidos |
Descargar: | Descargar PDF |
Resumen: | Widening income inequality is the defining challenge of our time. In advanced economies, the gap between the rich and poor is at its highest level in decades. Inequality trends have been more mixed in emerging markets and developing countries (EMDCsf), with some countries experiencing declining inequality, but pervasive inequities in access to education, healthcare, and finance remain. Not surprisingly then, the extent of inequality, its drivers, and what to do about it have become some of the most hotly debated issues by policymakers and researchers alike. Against this background, the objective of this paper is two-fold. First, we show why policymakers need to focus on the poor and the middle class. Earlier IMF work has shown that income inequality matters for growth and its sustainability. Our analysis suggests that the income distribution itself matters for growth as well. Specifically, if the income share of the top 20 percent (the rich) increases, then GDP growth actually declines over the medium term, suggesting that the benefits do not trickle down. In contrast, an increase in the income share of the bottom 20 percent (the poor) is associated with higher GDP growth. The poor and the middle class matter the most for growth via a number of interrelated economic, social, and political channels. Second , we investigate what explains the divergen t trends in inequality developments across advanced economies and EMDCs, with a particular focus on the poor and the middle class. While most existing studies have focused on advanced co untries and looked at the drivers of the Gini coefficient and the income of the rich, this stud y explores a more diverse group of countries and pays particular attention to the income shares of the poor and the middle class—the main engines of growth. Our analysis suggests that Technological progress and the re sulting rise in the skill premium (positives for growth and productivity) and the decline of some labor market institutions have contributed to inequality in both advanced economies and EMDCs. Globalizat ion has played a smaller but reinforcing role. Interestingly, we find that rising skill premium is associated with widening income disparities in advanced countries, while financial deepening is associated with rising inequality in EMDCs, suggesting scope for policies that promote financial inclusion. Policies that focus on the poor and the middle clas s can mitigate inequality. Irrespective of the level of economic development, better access to education and health care and well-targeted social policies, while ensuring that labor market institutions do not excessively penalize the poor, can help raise the income share for the poor and the middle class. There is no one-size-fits-all approach to tacklin g inequality. The nature of appropriate policies depends on the underlying drivers and country-s pecific policy and institutional settings. In advanced economies, policies should focus on reforms to increase human capital and skills, coupled with making tax systems more progressi ve. In EMDCs, ensuring financial deepening is accompanied with greater financial inclusion and creating incentives for lowering informality would be important. More gene rally, complementarities between growth and income equality objectives suggest that policies aimed at raisin g average living standards can also influence the distribution of income and ensure a more inclusive prosperity. |