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Links between Growth, Inequality, and Poverty : A Survey (English)

Is there a trade-off between raising growth and reducing inequality and poverty? This paper reviews the theoretical and empirical literature on the complex links between growth, inequality, and poverty, with causation going in both directions. The evidence suggests that growth can be effective in reducing poverty, but its impact on inequality is ambiguous and depends on the underlying sources of growth. The impact of poverty and inequality on growth is likewise ambiguous, as several channels mediate the relationship. But most plausible mechanisms suggest that poverty and inequality reduce growth, at least in the long run. Policies play a role in shaping these relationships and those designed to improve equality of opportunity can simultaneously improve inclusiveness and growth.


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    Cerra,Valerie, Lama,Ruy, Loayza,Norman V.

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    Policy Research Working Paper

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    The World Region,

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    Links between Growth, Inequality, and Poverty : A Survey

  • Keywords

    empirical estimate; demand for low-skilled workers; change in income; advanced economy; Poverty & Inequality; development research group; steady state capital stock; determinants of economic growth; per capita income growth; history of economic thought; information and communication technology; marginal product of labor; increase in market prices; impact of trade liberalization; standard deviation of log; Drivers of Economic Growth; income inequality; emerging market economy; neoclassical growth model; technological change; Learning and Innovation Credit; factor of production; returns to capital; policy and institution; purchasing power parity; changes in inequality; share of income; reduction in poverty; inequality on growth; return on capital; cost of finance; increase in income; decline in poverty; impact on poverty; impact of poverty; poverty across country; public good; Public Goods; lower educational attainment; dimension of inequality; emerging market country; social welfare function; global financial integration; labor market condition; inequality and growth; import of product; global financial crisis; economic growth rate; data on poverty; lower fertility rate; effects on income; foreign direct investment; long-term economic growth; incentives for investment; equality of opportunity; total factor productivity; incidence of tax; high income inequality; increase in labor; international oil price; Boosting Growth; Access to Education; perfectly competitive market; determining poverty reduction; competitive market structure; supply of labor; domestic financial market; financial market integration; panel data set; high poverty rate; access to health; growth in agriculture; natural resource sector; increased inequality; unskilled worker; poverty ratio



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Cerra,Valerie Lama,Ruy Loayza,Norman V.

Links between Growth, Inequality, and Poverty : A Survey (English). Policy Research working paper,no. WPS 9603 Washington, D.C. : World Bank Group.