Error 1: Use of Pre-Tax, Pre-Transfer Income to Measure Inequality. Throughout the report, the IMF uses the concept of “market income” to measure inequality. Market income is defined as income before taxes are paid to the government, and before transfers from the government to low-income individuals…
Error 2: More Inequality Leads to Lower Mobility. … Data from University of Ottawa professor Miles Corak on the United States, Canada, and Sweden suggest that more inequality is associated with higher mobility, not less mobility. Winship’s findings echo those of Harvard University economist Raj Chetty, who found little association between the share of income of the top one percent and mobility, either in the United States or between different countries…
Error 3: Tax Increases Lead to Higher Economic Growth… If transfers of income from one group to another succeeded in creating economic growth, the fastest-growing countries would be those with the highest top tax rates. As Nobel Prize-winning economist Edward Prescott has shown, the reverse is true.
Inequality as a Barrier to Growth? Invented Out of Thin Air | e21
28 Apr 2014 Leave a comment
in labour economics, macroeconomics
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