(C) Ohio Capital Journal
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Is big split between rich and poor making us all poorer? Maybe [1]
['Marty Schladen', 'More From Author', '- August']
Date: 2022-08-30
It seems as if income inequality would slow the economy. But in a recent survey a big portion of a panel of Ohio economists said… that depends.
In the survey of 26 Ohio economists released Monday, 14 agreed that rising inequality in Ohio is slowing economic growth, four disagreed and eight said they were unsure.
By some economic metrics there’s certainly cause to be concerned that a large swathe of Ohioans are so poor that they find it difficult to be productive in the state economy. Consider:
Having so many people living in or near poverty and ill-health can limit economic growth in a lot of ways. For one, they simply have less money to spend on goods and services produced by others, limiting economic activity.
For another, they might lack things like stable housing and transportation that are almost required to hold a job. Also, people in Ohio seem to be getting sicker at younger ages than in most other states, limiting their ability to work and participate in the economy.
Most of the economists surveyed agreed that having so many people making so little is holding Ohio back.
“High-income, high-education, high-tax-base areas do well, but at the expense of lower-income, lower-education, lower-tax-base areas and the end result is the state overall is pulled down,” Kevin Egan of the University of Toledo wrote in the comments section of the survey. “Truly we are all in this together as every household is workers, especially investments in children as future workers and Ohio has a child poverty rate of 19% which is double the child poverty rate of some other states. We could choose many efficient and fair policies to reverse this, beginning with reducing child poverty rates.”
Fadhel Kaboub of Denison University agreed that inequality costs everybody.
“The empirical literature is very clear on the negative impact that inequality has on economic growth,” he wrote. “The most impactful pro-growth policies are the ones that invest in education, health, infrastructure, and job creation opportunities for the bottom half of the income ladder.”
As they often do, one economist who said he was uncertain about the impact of inequality on the overall economy wanted clearer definitions.
“My gut says ‘agree’ but I don’t think the evidence is clear,” wrote Paul Holmes of Ashland University. “I think it also depends on what we mean by ‘growth’; (gross domestic product) per capita could be increased by inequality while median household income could be decreased, for example.”
None of the four economists who disagreed that inequality diminishes economic growth furnished an explanation for that view.
Follow Marty Schladen on Twitter.
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