Inequality is Bad for Growth of the Poor (But Not for that of the Rich)

40 Pages Posted: 20 Apr 2016 Last revised: 27 Apr 2018

See all articles by Roy van der Weide

Roy van der Weide

World Bank; World Bank - Development Research Group (DECRG)

Branko Milanovic

World Bank - Development Research Group (DECRG); University of Maryland

Date Written: July 1, 2014

Abstract

The paper assesses the impact of overall inequality, as well as inequality among the poor and among the rich, on the growth rates along various percentiles of the income distribution. The analysis uses micro-census data from U.S. states covering the period from 1960 to 2010. The paper finds evidence that high levels of inequality reduce the income growth of the poor and, if anything, help the growth of the rich. When inequality is deconstructed into bottom and top inequality, the analysis finds that it is mostly top inequality that is holding back growth at the bottom.

Keywords: Educational Sciences, Inequality, Poverty Reduction Strategies, Labor Markets

Suggested Citation

van der Weide, Roy and Milanovic, Branko, Inequality is Bad for Growth of the Poor (But Not for that of the Rich) (July 1, 2014). World Bank Policy Research Working Paper No. 6963. Available at SSRN: https://ssrn.com/abstract=2461941

Roy Van der Weide (Contact Author)

World Bank ( email )

1818 H Street, N.W.
Washington, DC 20433
United States

World Bank - Development Research Group (DECRG)

1818 H. Street, N.W.
MSN3-311
Washington, DC 20433
United States

Branko Milanovic

World Bank - Development Research Group (DECRG) ( email )

1818 H. Street, N.W.
MSN3-311
Washington, DC 20433
United States
202-473-6968 (Phone)
202-522-1153 (Fax)

HOME PAGE: http://econ.worldbank.org/staff/bmilanovic

University of Maryland ( email )

College Park
College Park, MD 20742
United States

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