Reducing Income Inequality Boosts Growth, IMF Study Finds

Countries that reduce income inequality by boosting the poor’s share of wages aren’t just reducing poverty -- they’re also a providing a boon to economic growth, according to an International Monetary Fund study.

If the income share of the richest 20 percent increases by 1 percentage point, output growth is 0.08 percentage point lower in the following five years, “suggesting that the benefits do not trickle down,” IMF researchers said in a paper released Monday. Income growth in the bottom fifth boosts expansion by 0.38 percentage point over the same period.