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Article:

5 Reasons to Care About America's Income Gap

How the Divide Between Rich & Poor Affects Us All

It's Bad for Economic Growth

Recent research by Andrew Berg and Jonathan Ostry of the International Monetary Fund suggests that countries with high income inequality have a harder time sustaining long-term economic growth than those with smaller income gaps. 

Income inequality may make financial crises more likely or increase political instability, discouraging investment, Berg and Ostry theorized.

Furthermore, "inequality may make it harder for governments to make difficult but necessary choices in the face of shocks, such as raising taxes or cutting public spending to avoid a debt crisis," they wrote. "Or inequality may reflect poor people’s lack of access to financial services, which gives them fewer opportunities to invest in education and entrepreneurial activity."

 

  • Sarah Shemkus

    Sarah Shemkus is an award-winning freelance journalist, marketing enthusiast, accomplished baker, occasional globetrotter and total nerd (with a particular fondness for spreadsheets). Most recently, she reported on business and real estate … Read more...