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Does growth lead to inequality? It depends.

Causa, Orsetta, Hermansen, Mikkel, Ruiz, Nicolas, (2017), “Does growth lead to inequality? It depends.”, Structural Surveillance Division, OECD Economics Department, 10 January

Widespread increases in inequality over the past three decades have raised the question of whether growth in itself is a driver of income inequality. Considering that correlation often tells little about causation, this question is less trivial than may appear at first glance. Indeed, the concomitant rise in GDP per capita and income inequality does not, per se, imply any causal relationship from the former to the latter. Research efforts have offered mixed conclusions so far and the growth and inequality question has been at the centre of a long-standing controversy among economists (Dollar et al. 2015). New OECD research by Hermansen et al. (2016) shows that in order to provide a convincing answer, the question needs to be framed more specifically.

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