Among the biggest challenges facing US policy makers are rising inequality and the urgent need to maintain and upgrade dilapidated infrastructure on a national scale. While governments often increase public spending on infrastructure to stimulate growth during economic downturns, the presenters argued that infrastructure investments through new sources of financing can also serve as an effective policy mechanism to reduce income inequality even when the economy is experiencing stable growth.
CCSI and Columbia SIPA Economic and Political Development co-sponsored a presentation by Sanjay Peters (SIPA, Columbia University) and Patrick Pintus (Aix‑Marseille University), who discussed their first-of-its kind study, using micro data at the US State level from 1950 to 2010, which shows that growth in highways and higher education spending during a given decade can translate into less inequality at the end of a decade long period. This causal effect is more pronounced at the bottom 40 per cent of the income distribution.
Though US centric in its focus, this study offers important strategies for other industrially advanced as well as developing economies to generate economic growth and reduce income inequality through sustainable infrastructure investments.
About the Authors:
Sanjay Peters teaches on the Executive Master Program in Public Administration at SIPA, Columbia University. He was Associate Professor of Economics at the Department of International Economics and Management at Copenhagen Business School. He holds a PhD in Economics from the University of Cambridge UK. Apart from having taught economics at a graduate level at Cambridge University, he has also worked as an economic advisor to the foreign office of the UK Government, consultant to the World Bank and the United Nations Development Program. He serves on the Editorial Board of several scholarly journals and as an economic advisor to a number of leading multinational companies, and governmental ministries within Europe, Asia and Africa. He served as Associate Professor in the Department of Economics and also as the Director of the Center for Emerging Markets at IESE Business School, in Barcelona, Spain. Prior to joining the Department of Economics at IESE, he was Associate Professor in the Department of Economics at ESADE Business School in Barcelona, Director of the China Executive Leadership Program and Academic Director of the Executive MBA Program at ISB (the Indian School of Business), both on behalf of ESADE. His main area of specialisation, and hence publications in academic journals and books are on emerging markets. His current research focuses on inequality, sovereign wealth funds and long-term investments in infrastructure.
Patrick Pintus is Professor at Aix‑Marseille University and an honorary member of the Institut Universitaire de France, on leave at the Monetary Policy Division of the Banque de France. He is a graduate of the École normale supérieure (ENS) de Cachan and holds a PhD from the École des hautes études en sciences sociales (EHESS). He has held research and teaching positions at UCLA, Washington University in St Louis, the St Louis Fed, and Konstanz University. His academic research has mainly focused on the macroeconomic consequences of imperfections in capital and credit markets, and on the relationship between international financial globalisation and growth. His more recent work has looked at the effectiveness of monetary policy and at the empirical link between public infrastructure and income inequalities. His most recent articles have been published in European Economic Review, Journal of Economic Growth, Optimal Control Applications and Methods, and Review of Economic Dynamics.