The Review of Black Political Economy

, Volume 21, Issue 3, pp 65–72 | Cite as

Economic growth and equity: Complements or opposites?

  • Donald J. Harris


There is no automatic mechanism in a market economy to guarantee reduced inequality of income with growth. Some theories lead us to expect just the opposite. At best, there are self-limiting cyclical effects, associated with changes in unemployment. U.S. economic growth has actually been quite slow since the 1950s. Besides, there are structural barriers to reduced inequality that operate with or without growth. Historical evidence for different countries presents a mixed picture. For the U.S. economy, postwar growth has been associated with an upturn in measured inequality. Government intervention has been mildly equalizing, through transfers and expenditures but not through taxes.


Income Inequality Income Distribution Gini Coefficient Capitalist Economy Automatic Mechanism 
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  1. 1.
    The cyclical behavior of income inequality in the U.S. has been confirmed empirically and its causes studied in C. Metcalf,An Econometric Model of Income Distribution (Chicago: Markham, 1972); T. Mirer, “The Effects of Macroeconomic Fluctuations on the Distribution of Income,”Review of Income and Wealth 19, 1973; R. Blank and A. Blinder, “Macroeconomics, Income Distribution, and Poverty,”Fighting Poverty: What Works and What Doesn’t, edited by S. Danziger and D. Weinberg (Cambridge, Mass.: Harvard University Press, 1986), pp. 182-208; and S. Danziger and P. Gottschalk, “Do Rising Tides Lift All Boats? The Impact of Secular and Cyclical Changes on Poverty,” mimeo, 1985.Google Scholar
  2. 2.
    See International Bank for Reconstruction and Development,World Development Report, 1982, 1989 (New York: Oxford University Press, 1982-89).Google Scholar
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    S. A. Morley,Labor Markets and Inequitable Growth: The Case of Authoritar-ian Capitalism in Brazil (New York: Cambridge University Press, 1982).Google Scholar
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  5. 5.
    For various analyses of the data and discussions of the findings see S. Danziger and E. Smolensky, “Income Inequality: Problems of Measurement and Interpretation,” inAmerican Society, Inc., 2nd ed., edited by M. Zeitlin (Chicago: Rand McNally, 1977); M. Reynolds and E. Smolensky, “Post-Fisc Distribution of Income in 1950, 1961, and 1970,”Public Finance Quarterly 5 (1977), pp. 419-38; M. Reynolds and E. Smolensky,Public Expenditures, Taxes, and the Distribution of Income (New York: Academic Press, 1977); J. A. Pechman,Who Paid the Taxes, 1966–85 (Washington, D.C.: Brookings Institution, 1985); P. Gottschalk and S. Danziger, “A Framework for Evaluating the Effects of Economic Growth and Transfers on Poverty,”American Economic Review 75 (1985), pp. 153-61; and Danziger and Gottschalk, “Do Rising Tides Lift All Boats.”Google Scholar
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    M. Reynolds and E. Smolensky, “Post-Fisc Distribution,” p. 429.Google Scholar
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    P. Lindert and J. Williamson, “Three Centuries of American Inequality,”Research in Economic History 1 (New York: JAI Press, 1976). This paper notes (p. 108, n.13): “The Gini coefficient produced by the OBE-Goldsmith data seems to have dropped by about 0.110 between 1929 and 1951. By comparison, Reynolds and Smolensky (Public Expenditures), have estimated that the total redistributive effect of all government spending and taxation was on the order of 0.079 for 1950, and about 0.110 for 1970. To improve comparability, transfer payments should be subtracted from the OBE-Goldsmith data. Doing so would bring the pre-fisc equilization of 1929–1951 down to about the 1950 estimate of government redistribution.”Google Scholar
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© Springer 1993

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  • Donald J. Harris

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