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Is Inequality Harmful for Growth?

Walter Block (Harold E. Wirth Eminent Professor Scholar Chair in Economics, College of Business Administration, Loyola University New Orleans, New Orleans, LA 70118)


ISSN: 0828-8666

Article publication date: 1 February 2000



Some economic commentators claim that inequality of wealth or income reduces economic development and growth of GDP. But this is counterintuitive, since economic breakthroughs usually occur by dint of great effort, or discovery, or invention, which brings great wealth to those responsible (think Bill Gates). Nor is this thesis supported by a proper interpretation of the facts of the matter, despite the contentions of several authors in this regard. Torsten Persson and Guido Tabellini (1994) (hence, PT) have an interesting thesis. It is that inequality is harmful for economic growth. That is, ceteris paribus, the more equal is the income or wealth distribution, the better are a country's prospects for economic development.


Block, W. (2000), "Is Inequality Harmful for Growth?", Humanomics, Vol. 16 No. 2, pp. 52-58.




Copyright © 2000, MCB UP Limited

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