Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/285354 
Year of Publication: 
2024
Series/Report no.: 
Research Paper No. 27
Publisher: 
EcoAustria - Institute for Economic Research, Vienna
Abstract: 
This paper analyzes the relationship between economic growth, inequality and redistribution. In a cross-country setting for 25 EU countries over the period 2007-2019, we show that market income inequality is associated with higher growth in the short run. To estimate the impact of redistribution to low-income earners, we introduce a new measure, the so-called net benefit share (NBS). Contrary to other findings, we show that this (targeted) redistribution to low income earners (Q1 NBS) boosts growth in the short run, driven by the consumption and private investment channels. On the other hand, untargeted redistribution to higher income earners reduces growth.
Subjects: 
growth
redistribution
inequality
European Union
JEL: 
H23
O47
D63
Document Type: 
Working Paper

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