Income Inequality Boosts Economic Growth, Study Finds
The article explores how the distribution of income affects economic growth. By studying a model of capital accumulation with endogenous labor supply, the researchers found that a more unequal distribution of wealth can lead to higher growth rates in an economy. This is because when income inequality is greater, the economy can achieve a higher rate of growth in per-capita output. The study shows that countries with the same technologies and preferences can have different GDP growth rates due to differences in how wealth is distributed among their populations.