Does redistribution hurt growth? An empirical assessment of the redistribution-growth relationship in the European Union
This paper analyzes the relationship between economic growth, inequality and redistribution. In a cross-country setting for 25 EU countries over the period 2007-2019, we show that market income inequality is associated with higher growth in the short run. To estimate the impact of redistribution to low-income earners, we introduce a new measure, the so-called net benefit share (NBS). Contrary to other findings, we show that this (targeted) redistribution to low income earners (Q1 NBS) boosts growth in the short run, driven by the consumption and private investment channels. On the other hand, untargeted redistribution to higher income earners reduces growth.
Year of publication: |
2024
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Authors: | Köppl-Turyna, Monika ; Christl, Michael ; De Poli, Silvia |
Publisher: |
Vienna : EcoAustria - Institute for Economic Research |
Subject: | growth | redistribution | inequality | European Union |
Saved in:
freely available
Series: | Research Paper ; 27 |
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Type of publication: | Book / Working Paper |
Type of publication (narrower categories): | Working Paper |
Language: | English |
Other identifiers: | 1882659961 [GVK] hdl:10419/285354 [Handle] RePEc:zbw:ecoarp:285354 [RePEc] |
Classification: | H23 - Externalities; Redistributive Effects ; Environmental Taxes and Subsidies ; O47 - Measurement of Economic Growth; Aggregate Productivity ; D63 - Equity, Justice, Inequality, and Other Normative Criteria and Measurement |
Source: |
Persistent link: https://www.econbiz.de/10014492497