Income Inquality and Sustained Economic Growth

This study by the IMF raises the question about the relationship between income inequality and sustained economic growth. All economists agree that some level of income inequality is needed to motivate individuals and organizations to take the initiatives that foster economic growth. This study shows that extended periods of economic growth are associated with low levels of income inequality. Nations that have have experienced spurts of growth and then declines in growth rates have typically had higher levels of income inequality. They conclude that the level of income inequality in a nation is a good predictor of sustained economic growth.