More Inequality for More Growth?
Raghuram Rajan recently argued that reviving growth in Europe requires reducing labor-market protection and, in turn, exacerbating growth in inequality. But Rajan’s analysis is problematic for three main reasons, pointing to the need for economists to abandon their reliance on mainstream supply-side theory.
https://prosyn.org/74P3dHD
PARIS – In a recent commentary, “Is Inequality Inhibiting Growth?”, Raghuram Rajan argues that income inequality, which has been on the rise since the 1970’s, can be explained in two ways. Progressive economists blame pro-rich policies. The “alternative” explanation (or, more accurately, the conservative view) focuses on skill-biased technological progress.