OECD: Widening Income Gap Holds Back Growth

The widening gap between haves and have-nots in much of the developed world is holding back economic growth, according to a global study.

The Organisation for Economic Cooperation and Development (OECD) said income inequality has not just social and political implications but also economic ones.

An increase in income inequality between 1985 and 2005 knocked 4.7 percentage points off cumulative growth between 1990 and 2010 on average across a range of its 34 member countries, the group said.

"Put simply: rising inequality is bad for long-term growth," the Paris-based OECD concluded in its report.

In the US, for example, between 2008 and 2013, real average household disposable income in the top 10% rose 10.6%, while in the bottom 10% it fell 3.2%.

Austria, Denmark and France are other countries where rising income at the top has been accompanied by falling incomes at the bottom, according to the report, called In It Together, Why Less Inequality Benefits All.

The average income of the top 10% in America was 19 times higher than the bottom 10% in 2013, far higher than the OECD average of 9.6 times.

The study says policies to improve women's treatment in the labour market and measures to reverse the growing share of low-quality jobs are key to reducing income inequality and unlocking more economic growth.