The Unassuming Economist

From a paper by Danny Quah:

“Appropriate public policy on inequality hinges critically on understanding inequality’s eects on the living conditions of the poor, on social mobility, and on nationalist populism. This paper describes two empirical regularities. First, an increase in inequality typically does not coincide with immiserisation of the poor and lower middle class. Over 80% of economies where inequality has risen since 2000 have also increased the average incomes of their populations’ bottom 50%. Second, for political upheaval, individual well-being and expectations on its trajectory matter more than inequality. When these causal factors diverge, the role of inequality is, thus, diminished. Public policy needs to counter misinterpretation and misinformation on inequality with rigorous analysis and empirical evidence.”