1887

OECD Economics Department Working Papers

Working papers from the Economics Department of the OECD that cover the full range of the Department’s work including the economic situation, policy analysis and projections; fiscal policy, public expenditure and taxation; and structural issues including ageing, growth and productivity, migration, environment, human capital, housing, trade and investment, labour markets, regulatory reform, competition, health, and other issues.

The views expressed in these papers are those of the author(s) and do not necessarily reflect those of the OECD or of the governments of its member countries.

English, French

Can Pro-growth Policies Lift all Boats?

An Analysis Based on Household Disposable Income

In a majority of OECD countries, GDP growth over the past three decades has been associated with growing income disparities. To shed some lights on the potential sources of trade-offs between growth and equity, this paper investigates the long-run impact of structural reforms on GDP per capita and household income distribution. Pro-growth reforms can be distinguished according to whether they are found to generate an increase or a reduction in household disposable income inequality. Those that contribute to reduce inequality include the reduction in regulatory barriers to competition, trade and FDI, as well as the stepping-up in job search assistance and training programmes. Conversely, a tightening of unemployment benefits for the long-term unemployed is found to lift mean household income but to lower income among poorer households, thus raising inequality. Several other reforms have no significant impact on income distribution.

English

Keywords: inequality, growth, pro-growth policies
JEL: E61: Macroeconomics and Monetary Economics / Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook / Policy Objectives; Policy Designs and Consistency; Policy Coordination; O47: Economic Development, Innovation, Technological Change, and Growth / Economic Growth and Aggregate Productivity / Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
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