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Does income inequality hurt economic growth?

Focus on Inequality and Growth – OECD – December 2014. Directorate for Employment, Labour and Social Affairs. “Widespread increases in income inequality have raised concerns about their potential impact on our societies and economies. New OECD research shows that when income inequality rises, economic growth falls. One reason is that poorer members of society are less able to invest in their education. Tackling inequality can make our societies fairer and our economies stronger. A long-term rise of income inequality. The gap between rich and poor is at its highest level in most OECD countries in 30 years. Today, the richest 10% of the population in the OECD area earn 9.5 times more than the poorest 10%. By contrast, in the 1980s the ratio stood at 7:1. The average incomes at the top of the distribution have seen particular gains. However, there have also been significant changes at the other end of the scale.  In many countries, incomes of the bottom 10% of earners grew much more slowly during the prosperous years and fell during downturns, putting relative (and in some countries, absolute) income poverty income poverty on the radar of policy concerns.”

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