Inequality curbs economic growth - OECD
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 Gurrķa.
"Countries that promote equal opportunity for all from an early age
are those that will grow and prosper," she said.
In the 34 countries that are members of the OECD, the gap between the
rich and the poor is at the highest level in 30 years, the group said.
The richest 10% in those states earn, on average, 9.5 times the
poorest. In the 1980s, they earned seven times as much. The only
countries in which the OECD found inequality had fallen were Greece and
Turkey.
A lack of investment in education was the key factor behind rising
inequality, the OECD said. Fewer educational opportunities for
disadvantaged people had the effect of "lowering social mobility and
hampering skills development," the report warned.
It also said that those whose parents have low levels of education
suffer most when inequality rises, whereas family background matters
less to those from a more educated social sphere. The OECD called for
policymakers to do more than just implement anti-poverty programs.
"Policy also needs to confront the historical legacy of
underinvestment by low income groups in formal education," it said.
"Strategies to foster skills development must include improved
job-related training and education for the low-skilled, over the whole
working life."
- BBC
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