At this year’s World Economic Forum meeting in Davos, Switzerland, participants did not question the basic building blocks of growth in today’s global economy: free markets, good governance, and investment in human capital and infrastructure. But they did criticise how unfairly the benefits of growth are being distributed. Rightly so: without a strong policy response aimed at building a more inclusive growth model, rising populism and economic nationalism will impair the functioning of markets and overall macroeconomic stability – potentially cutting short the current .

Virtually every economic policy has an impact on both aggregate income and its distribution. Some reforms — such as those promoting impartiality and efficiency of legal institutions — are good for growth and equity (in this case, equality of opportunity). Incidence results for deregulation of product and labour markets are more mixed, possibly as a result of data limitations and the specific circumstances of each reform.