Inequality of Opportunity and Economic Development

20 Pages Posted: 20 Jan 2006

See all articles by Francisco H. G. Ferreira

Francisco H. G. Ferreira

World Bank - Development Research Group (DECRG)

Michael Walton

Harvard University - Harvard Kennedy School (HKS)

Date Written: January 2006

Abstract

Just as equality of opportunity becomes an increasingly prominent concept in normative economics, the authors argue that it is also a relevant concept for positive models of the links between distribution and aggregate efficiency. Persuasive microeconomic evidence suggests that inequalities in wealth, power, and status have efficiency costs. These variables capture different aspects of people's opportunity sets, for which observed income may be a poor proxy. One implication is that the cross-country literature on income inequality and growth may have been barking up the wrong tree, and that alternative measures of the relevant distributions are needed. The authors review some of the detailed microeconomic evidence, and then suggest three research areas where further work is needed.

Keywords: Inequality of Opportunity, Equity and Efficiency, Inequality and Growth

JEL Classification: D30, D63, O15

Suggested Citation

Ferreira, Francisco H. G. and Walton, Michael, Inequality of Opportunity and Economic Development (January 2006). World Bank Policy Research Working Paper No. 3816, Available at SSRN: https://ssrn.com/abstract=875851

Francisco H. G. Ferreira (Contact Author)

World Bank - Development Research Group (DECRG) ( email )

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Michael Walton

Harvard University - Harvard Kennedy School (HKS) ( email )

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United States
617-496-4562 (Phone)
617-496-5747 (Fax)

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