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WP202208-Inequality-and-creative-destruction.pdf
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In this article we review recent evidence showing how market forces and policies shape the rate and direction of innovation, with various implications for inequality. First, we characterize several market mechanisms whereby higher rates of innovation lead to higher inequality. Second, we highlight channels whereby inequality acts as an impediment to innovation and growth. Third, we highlight policies that can help achieve better outcomes for both innovation and inequality. We show that two types of policies, which are not traditionally viewed as part of innovation policy, play a key role to achieve the goal of enhancing innovation while reducing inequality: education and competition policy.
Authors

CPP Co-Director
Richard is Co-Director of the Centre for the Microeconomic Analysis of Public Policy (CPP) and Senior Research Fellow at IFS.

Research Associate London School of Economics
Xavier is a Research Associate at the IFS, an Assistant Professor of Economics at the LSE and a member of the French Council of Economic Analysis.

Otto Toivanen
Working Paper details
- DOI
- 10.1920/wp.ifs.2022.0822
- Publisher
- The IFS
Suggested citation
R, Blundell and X, Jaravel and O, Toivanen. (2022). Inequality and creative destruction. London: The IFS. Available at: https://ifs.org.uk/publications/inequality-and-creative-destruction (accessed: 17 February 2025).
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