by Allanah Leahy – EM TV Online
In its latest report, titled ‘Causes and Consequences of Income Inequality: A Global Perspective’, the International Monetary Fund revealed that widening income inequality in developed economies contributes to a decline in economic growth, particularly when the income share increases for the top 20 per cent of households.
The report entails that inequality various around the world, but common contributors include the need of upskilling to keep on par with technological change and globalisation, and lack of financial inclusion in developing countries.
The IMF also found that rising income shares of the poor and middle class actually increases growth, while rising income shares of the top 20 per cent results in lower growth, saying when the rich get richer, benefits do not trickle down.
The IMF called for stronger focus on raising the income share of the poor, saying financial inclusion is crucial for emerging and developing countries, and urging for policies focused on raising human capital and skills, as well as more progressive tax systems.
