Natural inequality, production and economic growth

This paper explains why the effect of income inequality on productivity and growth is ambiguous. When income distribution exhibits inequality levels t hat are compatible with accepted criteria, productivity and growth ensue. W hen the divergence from an acceptable level of inequality occurs, then unde r certain conditions, we may expect lower (higher) production levels and lo wer (higher) levels of economic growth. (C) 2001 Elsevier Science B.V. All rights reserved.