OECD says inequality causes slower growth

Widening inequality creates a drag on growth that can be counteracted by tax policies to benefit the less well-off, according to the Organisation for Economic Co-operation and Development.

The Paris-based group said it undermines growth by preventing disadvantaged people from accessing education to develop their skills, impeding social mobility. To offset the damage, policy- makers need to be concerned with the general welfare of the bottom 40% of society and not just the poverty of the lowest 10%.

The study taps into a global debate this year about inequality, an issue also raised by US Federal Reserve Chair Janet Yellen in October when she questioned the disparities of wealth and income growth.