Income inequality has a “statistically significant impact” on economic growth, according to research by the Organisation for Economic Co-operation and Development (OECD). In the UK, rising inequality cost the economy almost nine percentage points of GDP growth between 1990 and 2010, the think tank said.
The US lost almost seven points. The OECD also found that redistribution of wealth via taxes and benefits does not hamper economic growth.
“This compelling evidence proves that addressing high and growing inequality is critical to promote strong and sustained growth and needs to be at the centre of the policy debate,” said OECD’s secretary general, Angel Gurría. “Countries that promote equal opportunity for all from an early age are those that will grow and prosper.”
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