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Links Between Growth, Inequality, and Poverty: A Survey
Author:
Ms. Valerie Cerra
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,
Mr. Ruy Lama
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, and
Norman Loayzanull

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Series:
IMF Working Papers
Volume/Issue:
Volume 2021: Issue 068
Language:
English
Publication Date:
12 Mar 2021
DOI:
https://doi.org/10.5089/9781513572666.001
ISBN:
9781513572666
ISSN:
1018-5941
Pages:
54
Keywords:
Growth; Inequality; Poverty; Income Distribution; Economic Development; Inclusive Growth; unbalanced growth; public goods; poverty-reducing effect; family income; poverty ratio; growth breeds poverty; poverty headcount ratio; Income inequality; Income; Poverty reduction; Global
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IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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Is there a tradeoff between raising growth and reducing inequality and poverty? This paper reviews the theoretical and empirical literature on the complex links between growth, inequality, and poverty, with causation going in both directions. The evidence suggests that growth can be effective in reducing poverty, but its impact on inequality is ambiguous and depends on the underlying sources of growth. The impact of poverty and inequality on growth is likewise ambiguous, as several channels mediate the relationship. But most plausible mechanisms suggest that poverty and inequality reduce growth, at least in the long run. Policies play a role in shaping these relationships and those designed to improve equality of opportunity can simultaneously improve inclusiveness and growth.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund
Volume 2021: Issue 068