ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -The second mechanism through which greater inequality can lead to higher growth is through more investment, given that high-income groups tend to save and invest more.

Detailed explanation-2: -Economic growth may have a negative impact on income inequality since economic growth is often positively associated with higher investments, higher employment-generating processes and higher employment, hence giving greater access to jobs and income to a larger number of people.

Detailed explanation-3: -Does Economic Growth reduce Relative Poverty? Economic growth will reduce income inequality if: Wages of the lowest paid rise faster than the average wage.

Detailed explanation-4: -Some of key factors behind the increase in within-country income inequality noted in the literature include technological progress, globalization, commodity price cycles, and domestic economic policies such as redistributive fiscal policies, labor and product market policies.