Because factor prices are assumed to function as the ultimate signals and incentives in any economy, correcting these prices (i.e., lowering the relative price of labor and raising the relative price of capital) would not in general
only increase productivity and efficiency but also reduce inequality by providing more wage-paying jobs for currently unemployed or under employed unskilled and semiskilled workers. It would also lower the artificially high
incomes of owners of capital. Removal of such factor-price distortions would therefore go a long way toward combining more growth, efficiently generated, with higher employment, less poverty, and greater equality (a more detailed
analysis is presented in Appendix 5.1).