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This paper deals with the question of weather a growing income inequality promotes or dampens economic growth. You can download it via the download button above.<\/p>\n
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Increases in income inequality have both growth-promoting effects (stronger performance incentives, as well as incentives to invest in one\u2019s own human capital, to take risks, and to make investments) and growth-dampening effects (demotivating incentives, social tensions and political unrest, declines in demand as a brake on growth). While increases in income inequality in the 1950s and the 1960s still led to growth-promoting effects, current studies increasingly identify growth-dampening effects. Particularly in highly developed economies such as Germany, Japan and the United States, these studies indicate that increasing income inequality has reached a level that is becoming a brake on growth. For this reason, there is no fundamental contradiction between state-led income redistribution and economic growth. The reduction of income inequality should not be limited to a pure redistribution through the tax-transfer system, but should also include a rebalancing of the supply-side policies of the past 30 years.<\/p>\n","excerpt":"
This impulse paper looks at the economic theory behind the effects that growing income inequality has on economic growth and applies it to the current economic situation in Germany and other developed nations.<\/p>\n","thumbnail":null,"thumbnailsquare":null,"authors":[{"id":312,"name":"Thie\u00df Petersen","link":"https:\/\/bst-europe.eu\/blogger\/dr-thiess-petersen\/"}],"categories":[{"id":152,"name":"Globalization","link":"https:\/\/bst-europe.eu\/category\/globalization\/"}],"tags":[]}