Contrary to what many people believe, economic growth does not necessarily increase the gap between the rich and poor. In the 88 instances where a country achieved per capita GDP growth for a decade, inequality improved slightly in about half the cases and worsened slightly in the other half. Because the changes in inequality were quite small, growth almost always improved the incomes of the poor. Although growth does not consistently affect inequality one way or the other, the level of inequality does affect growth. Following are key facts emerging from the research as well as background information related to the issues of inequality, poverty and growth.
Inequality differs significantly across countries.
Shifts in inequality tend to be small. Among 49 countries with data on inequality over a long period, only four showed a substantial trend in either direction. Inequality declined in France and Italy and increased in China and New Zealand. Of course, inequality in both countries is still much lower than in many developing countries. Growth has no systematic impact on inequality.