PARIS–The widening gap between haves and have-nots in much of the developed world not only raises concerns about the fraying social fabric – it's also dramatically holding back economic growth, according to a new global study.
Far from a rising tide lifting all ships, income inequality increases in good economic times as well as bad, the report from the Organization for Economic Cooperation and Development (OECD) says.
The OECD, a global watchdog, says that not only has social and political implications but also economic ones.
"Put simply: rising inequality is bad for long-term growth," the OECD concluded in its report, In It Together, Why Less Inequality Benefits All.
An increase in income inequality between 1985 and 2005 knocked 4.7 percentage points off cumulative growth between 1990 and 2010 on average across a range of its 34 member countries, the OECD said.
The problem is particularly acute in the US: Between 2008 and 2013, real average household disposable income at the top ten per cent rose 10.6 per cent, while in the bottom ten per cent it fell 3.2 per cent, the OECD said. Austria, Denmark and France are other countries where rising income at the top has been accompanied by falling incomes at the bottom. (AP)