The big trade-off between efficiency and equity—is it there?

Andersen, Torben M.; Maibom, Jonas

doi:10.1093/oep/gpz040

Cited by 14 publications

(14 citation statements)

References 23 publications

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“…That said, it is noteworthy that Finland and Sweden, experiencing marked declines in redistribution, also displayed among the strongest economic performance for the period under consideration. Some scholars have argued that these countries, and the Nordics in general, which started from very high levels of redistribution, may have faced a binding equity-efficiency trade-off and opted for less redistribution in exchange for more economic growth (see Andersen and Maibom, 2016;OECD, 2017e;Pareliussen et al, forthcoming).…”

mentioning

confidence: 99%

Income redistribution through taxes and transfers across OECD countries

Causa¹,

Hermansen²

2017

OECD Economics Department Working Papers

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This document, as well as any data and map included herein, are without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area. 2  ECO/WKP(2017)85 INCOME REDISTRIBUTION THROUGH TAXES AND TRANSFERS ACROSS OECD COUNTRIES Unclassified OECD Working Papers should not be reported as representing the official views of the OECD or of its member countries. The opinions expressed and arguments employed are those of the author(s). Working Papers describe preliminary results or research in progress by the author(s) and are published to stimulate discussion on a broad range of issues on which the OECD works.

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confidence: 99%

Income redistribution through taxes and transfers across OECD countries

Causa¹,

Hermansen²

2017

OECD Economics Department Working Papers

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“…There are several empirical studies that have found that national economic performance is actually positively related to income equality, thereby refuting the notion of a trade-off (for example, Berg and Ostry, 2011 ; Brueckner and Lederman, 2015 ; Cingano, 2014 ; Ostry et al, 2014 ). However, others in contrast continue to claim the evidence supports the idea that greater income equality dampens economic growth ( Andersen and Maibom, 2016 ). Others have questioned the idea of a trade-off on theoretical grounds ( Osberg, 1995 ), and still others even on philosophical grounds ( Le Grand, 1990 ).…”

Section: Is There a Trade-off Between Productivity And Equality? The mentioning

confidence: 99%

Rethinking the political economy of place: challenges of productivity and inclusion

Evenhuis

Lee

Martin

et al. 2021

Cambridge Journal of Regions, Economy and Society

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The global financial crisis of just over a decade ago exposed longer-term systemic problems in global capitalism of which two of the most prominent are the slowdown in the underlying trend rate of productivity growth, alongside a rise in economic and spatial inequalities in many advanced economies. The Covid-19 pandemic looks set to further amplify these problems. This Editorial begins by discussing the scale of the productivity slowdown and of the widening inequalities that have emerged, particularly with regard to their spatial dimension: that is how the uneven and slow development of productivity and rise in inequalities have played out across and within regions and cities. It then briefly considers underlying factors that lie behind these trends, including financialisation / financial globalization, the diminishing role of organised labour, segmentation of the labour market favouring workers who play a key role in financialisation, together with the increasing polarisation within societies according to skill and, crucially, the impact of changing industrial composition particularly as it relates to the rise of the high-tech sectors. The Editorial then examines in what ways the slowdown of productivity and widening of economic and spatial inequalities, may be interrelated, and questions the notion of any efficiency-equity trade-off. Lastly, it considers whether the ‘inclusive growth’ agenda can potentially reconcile the two ambitions of improving productivity performance and lessening inequalities, reflecting on what inclusive growth could mean, and what it could imply in terms of policy. Thus far, it appears that an inclusive growth agenda has only gained some traction at the subnational level, which seems to reflect – at least in part – attempts by cities and regions to address gaps in policy left by national governments.

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“…Economic theory predicts a tradeoff between equity and efficiency: for countries that are already on, or close to, the technological frontier, the distribution of income can only be improved by sacrificing growth (Acemoglu, Robinson, & Verdier, 2012;Andersen & Maibom, 2016). To test this prediction, the empirical literature has looked at the determinants of growth and income distribution separately, often by including synthetic metrics of income distribution, such as the Gini coefficient and quintile income shares, in augmented Solow-type equations using pooled or cross-sectional data.…”

Section: Insights From the Literaturementioning

confidence: 99%

Cross‐country evidence on the determinants of inclusive growth episodes

Jalles

Mello

2019

Review Development Economics

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Widening income disparities and slow productivity growth in most advanced and several emerging‐market economies have rekindled interest in the empirical analysis of the determinants of inclusive growth, defined in this paper as episodes of increases in GDP per capita without a concomitant deterioration in the distribution of household disposable income. The empirical analysis is based on a chronology of inclusive growth episodes between 1980 and 2013 for a sample of 78 countries. Logit and multinomial probit estimations show that human capital accumulation, the redistributive potential of tax‐benefit systems, increases in multifactor productivity and labor force participation, as well as trade openness and a range of institutional factors, including political system durability and electoral regimes, are important determinants of the probability of occurrence of inclusive growth. This empirical evidence contributes to the policy debate about how countries can deal with efficiency–equity tradeoffs.

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The big trade-off between efficiency and equity—is it there?

Cited by 14 publications

References 23 publications

Income redistribution through taxes and transfers across OECD countries

Income redistribution through taxes and transfers across OECD countries

Rethinking the political economy of place: challenges of productivity and inclusion

Cross‐country evidence on the determinants of inclusive growth episodes

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