Yes, this does tend to happen

The report, Richer Yet Poorer: Economic inequality and polarisation in the North of England, shows that economic growth has exacerbated the gap between rich and poor with the highest-earning 20% increasing their earnings at double the rate of the bottom 20%.

Periods of fast economic growth do tend to do this, increase inequality.

One reason, here in the UK, is that the top 20% tend to be getting their income from market activity, from working. Wages do, especially in times of fast economic growth, tend to rise faster than inflation.

However, a very large part of the bottom 20% are getting their incomes from State benefits. These tend to rise with inflation, not with wage growth.

Thus economic growth will expand income differentials.

Still beats not having economic growth, obviously.

2 thoughts on “Yes, this does tend to happen”

  1. “However, a very large part of the bottom 20% are getting their incomes from State benefits.”

    I know!!! When the economy is booming, let’s take all the money from people who ARE working and give it all to people who AREN’T working.

    Yay! It’s bound to work!

  2. The report doesn’t seem to be on the IPPR website, which is annoying, but the Grauniad piece says:

    “the north-west has the greatest pay inequality, with the top 20% earning £427 more a week than the bottom 20%.”

    That’d be an odd way to express a report that included benefits, but a normal way to express a report that looked solely at wage-earners.

Leave a Reply

Your email address will not be published. Required fields are marked *