A nice antidote to the current nonsense
I have a new paper out with Dan Andrews and Christopher Jencks, on the relationship between inequality and growth. We reach a finding that is pretty standard in this literature – when we restrict the sample to 1960-2000, more inequality seems to be good for growth. However, if the inequality arises from a transfer from the bottom 90% to the top 10%, we’re skeptical that the bottom 90% get enough back in growth to make up for their loss in share.
Here’s the abstract:
Do Rising Top Incomes Lift All Boats?
Dan Andrews, Christopher Jencks & Andrew Leigh
Pooling data for 1905 to 2000, we find no systematic relationship between top income shares and economic growth in a panel of 12 developed nations observed for between 22 and 85 years. After 1960, however, a one percentage point rise in the top decile’s income share is associated with a statistically significant…
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Utopia, you are standing in it! 
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