Hat tip Economist’s View for Lane Kenworthy’s post on growing the GDP and distribution of the benefits. It is also related to concpts determining trade policies:
None of these countries significantly increased the share of GDP going to government transfers. What happened is that some nations did more than others to pass the fruits of economic growth on to the poor.
Trickle down via transfers occurs in various ways. In some countries pensions, unemployment compensation, and related benefits are indexed to average wages, so they tend to rise automatically as the economy grows. Increases in other transfers, such as social assistance, require periodic policy updates. The same is true of tax reductions for low-income households.
Should we bemoan the fact that employment and earnings aren’t the key trickle-down mechanism?