Why Income Redistribution Doesn’t Hurt Growth

Mark Thoma at MoneyWatch points to :

Why income redistribution doesn’t hurt growth, by Mark Thoma: Thomas Piketty’s book “Capital in the Twenty-First Century” documents¬†the increase in inequality¬†in recent decades, and it has rekindled an old debate about the effects of income redistribution on economic growth. Until recently, most economists believed there’s a trade-off between equity and efficiency and that the redistribution of income would lower economic growth. …

But as the recent paper “Redistribution, Inequality, and Growth” by Jonathan D. Ostry, Andrew Berg, and Charalambos G. Tsangarides of the International Monetary Fund explains, there are also reasons to believe the redistribution of income can enhance economic growth in some cases. …