The Critical Role of Income Redistribution for Poverty Reduction: Alternative Scenarios

Submitted by on Thu, 02/03/2022 - 01:21

The correlation between economic growth and poverty reduction is not linear. The way in which additional income is distributed matters for poverty outcomes. The same economic growth rate can cause different levels of poverty reduction in countries with different levels of inequality. Evidence also shows that countries with a more equal distribution of assets and income often grow faster than those with a higher degree of inequality. There may thus exist a virtuous cycle between growth and equity. This policy brief will present modelling evidence which demonstrates the importance of addressing income inequality as a key strategy to accelerate the progress on SDG 1 (eradicating poverty).

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