Inequality of Opportunity and Economic Growth: A Cross-Country Analysis

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in EconStor may be saved and copied for your personal and scholarly purposes.You are not to copy documents for public or commercial purposes, to exhibit the documents publicly, to make them publicly available on the internet, or to distribute or otherwise use the documents in public. licence. www.econstor.eu If the documents have been made available under an Open Content Licence (especially Creative Commons Licences), you may exercise further usage rights as specified in the indicated D I S C U S S I O N P A P E R S E R I E S Christoph LaknerWorld Bank Maria Ana LugoWorld Bank Berk ÖzlerUniversity The Institute for the Study of Labor (IZA) in Bonn is a local and virtual international research center and a place of communication between science, politics and business. IZA is an independent nonprofit organization supported by Deutsche Post Foundation. The center is associated with the University of Bonn and offers a stimulating research environment through its international network, workshops and conferences, data service, project support, research visits and doctoral program. IZA engages in (i) original and internationally competitive research in all fields of labor economics, (ii) development of policy concepts, and (iii) dissemination of research results and concepts to the interested public.IZA Discussion Papers often represent preliminary work and are circulated to encourage discussion. Citation of such a paper should account for its provisional character. A revised version may be available directly from the author. Income differences arise from many sources. While some kinds of inequality, caused by effort differences, might be associated with faster economic growth, other kinds, arising from unequal opportunities for investment, might be detrimental to economic progress. We construct two new metadata sets, consisting of 118 household surveys and 134 Demographic and Health Surveys, to revisit the question of whether inequality is associated with economic growth and, in particular, to examine whether inequality of opportunity -driven by circumstances at birth -has a negative effect on subsequent growth. Results are suggestive but not robust: while overall income inequality is generally negatively associated with growth in the household survey sample, we find no evidence that this is due to the component we attribute to unequal opportunities. In the DHS sample, both overall wealth inequality and inequality of opportunity have...

Unequal Opportunity, Unequal Growth

“…12 Note that the measures of IO, derived from a limited set of circumstances (race and gender), capture roughly 10 percent of total inequality. While this may seem rather modest it is in fact reasonably large relative to estimates obtained for other countries with an often larger set of circumstances (see Ferreira et al, 2014). Let us also briefly inspect the time-trends in the selected control variables.…”

Income Inequality and Economic Growth: An Analysis Using a Panel Data

“…For them, financial exclusion is a blatant picture of unequal opportunities. As such, Ferreira discussed in 2014 the relationship between growth and the inequality of opportunity, which for him must be distinguished from other types of inequality caused by the effort of each individual (Ferreira, Lakner, Lugo, & Ozler, 2014). Milanovic (1994) used the Gini coefficient as variables to explain the inequalities by a vector of variables composed of GDP per capita expressed in PPP of 1988, the ratio between the average income of the richest region and that of the poorest one, the percentage of employees working in the public sector to replace the old dummies for the former socialist countries.…”

Towards more inclusive growth in Colombia

“…Inequality can impede upward social mobility by limiting job opportunities and access to education for the poorest children (OECD, 2011). This has negative consequences for overall economic performance (OECD, 2011, Ferreira et al 2014. Inequalities can also raise protectionist and anti-globalisation sentiment reducing trade and growth, and add to political challenges via social cohesion.…”