By Shane Oliver, Head of Investment Strategy & Chief Economist from Oliver’s Insights, AMP Capital, Edition 23 2017
Key points
- Inequality has been trending higher over recent decades. This is particularly the case in the emerging world and the US but is also evident in Australia.
- Key drivers have been a rising profits share of GDP, technological innovation and globalisation. It has become more noticeable thanks to slow wages growth.
- Inequality is natural and necessary in free market economies, but if it becomes too high it could slow economic growth.
- The key for policy makers in dealing with rising inequality is to get the balance right. Otherwise the risk could be slower productivity growth. For investors, this could mean slower medium-term investment returns.