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6 - Redressing Inequalities in Societies

Growth with Equity

from Part II - Policies and Institutions for Social Cohesion

Published online by Cambridge University Press:  05 August 2019

By
Frances Stewart
Edited by
Hiroyuki Hino ,
Arnim Langer ,
John Lonsdale  and
Frances Stewart
Hiroyuki Hino
Affiliation:
Duke University, North Carolina and the University of Cape Town
Arnim Langer
Affiliation:
Katholieke Universiteit Leuven, Belgium
John Lonsdale
Affiliation:
University of Cambridge
Frances Stewart
Affiliation:
University of Oxford
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Summary

This chapter considers whether there is a trade-off between growth and equality, as economists sometimes assert, differentiating between vertical inequality (among individuals) and horizontal inequality (among groups). Most evidence challenges the supposed trade-off, suggesting greater equality increases growth, especially sustained growth. Inequality among individuals tends to limit human resources, while inequality among groups can lead to violent conflict, and both constrain growth. Greater equality also supports other desirable objectives, including better nutrition, less crime, and better health. The impact of growth on equality is analysed. This depends on how far earnings are spread via employment; and the redistributionary effects of tax and government expenditure. Labour-intensive activities tend to improve distribution, while capital-intensive ones, heavy reliance on minerals for exports and rising skill requirements tend to worsen it. For horizontal inequality, the impact of growth varies according to group location, economic specialization and policies, illustrated by the experience of Ghana, Peru, Malaysia and Northern Ireland. The chapter surveys policies likely to improve vertical and horizontal distribution, with examples drawn from many countries. Finally, the chapter considers the political conditions needed to support equalising policies.

Keywords

GrowthEqualityHorizontal inequalityVertical inequalityTaxationGovernment expenditure
Type
Chapter
Information
From Divided Pasts to Cohesive Futures
Reflections on Africa
 , pp. 193 - 222
Publisher: Cambridge University Press
Print publication year: 2019

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