Income inequality impacts economic growth: small reductions hinder, large reductions promote.
The study looked at how income inequality affects economic growth. They found that the relationship between the two is not straightforward, and that past inequality and investment rates also play a role. Higher income inequality and small reductions in inequality can slow down growth, but large reductions can actually help it. Lower investment rates can lessen the negative impact of high inequality on growth. These results suggest that reducing income inequality and increasing investment can promote economic growth.