Income Mobility And Inequality Of Opportunity
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Using the world bank s new global database on intergenerational mobility it shows that in societies where opportunities are unequally.
Income mobility and inequality of opportunity. Our chart of the week shows how inequality of opportunity acts as an umpire in the relationship between income inequality and long term growth. In contrast in societies with a more equal distribution of opportunities an increase in income inequality can be more easily reversed and need not constrain investment opportunities and growth. There are contrasting theories on the relationship between income inequality and growth and the empirical evidence is similarly mixed. We identify equality of opportunity with intergenerational mobility that is the degree of the correlation between parents attainments income and.
The corollary is that not accounting for inequality of opportunity will tend to bias empirical estimates of the relationship between income inequality and growth. This column highlights the neglected role of equality of opportunity in mediating this relationship.
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