Unequal Opportunity, Unequal Growth

This paper argues that inequality can be both good and bad for growth, depending on what inequality and whose growth. Unequal societies may be holding back one segment of the population while helping another. Similarly, high levels of income inequa...

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Main Authors:	Marrero, Gustavo A., Rodriguez, Juan Gabriel, van der Weide, Roy
Format:	Working Paper
Language:	English en_US
Published:	World Bank, Washington, DC 2016
Subjects:	inequality inequality of opportunity opportunity growth poverty poor
Online Access:	http://documents.worldbank.org/curated/en/2016/10/26854147/unequal-opportunity-unequal-growth http://hdl.handle.net/10986/25298

id	okr-10986-25298
recordtype	oai_dc
spelling	okr-10986-252982021-04-23T14:04:29Z Unequal Opportunity, Unequal Growth Marrero, Gustavo A. Rodriguez, Juan Gabriel van der Weide, Roy inequality inequality of opportunity opportunity growth poverty poor This paper argues that inequality can be both good and bad for growth, depending on what inequality and whose growth. Unequal societies may be holding back one segment of the population while helping another. Similarly, high levels of income inequality may be due to a variety of different factors; some of these may be good while others may be bad for growth. The paper tests this hypothesis by “unpacking” both inequality and growth. Total inequality is decomposed into inequality of opportunity, due to observed factors that are beyond the individual's control, and residual inequality. Growth is measured at different steps of the income ladder to verify whether low, middle, and top income households fare differently in societies with high (low) levels of inequality. In an application to the United States covering 1960 to 2010, the paper finds that inequality of opportunity is particularly bad for growth of the poor. When inequality of opportunity is controlled for, the importance of total income inequality is dramatically reduced. These results are robust to different measures of inequality of opportunity and econometric methods. 2016-11-01T13:59:00Z 2016-11-01T13:59:00Z 2016-10 Working Paper http://documents.worldbank.org/curated/en/2016/10/26854147/unequal-opportunity-unequal-growth http://hdl.handle.net/10986/25298 English en_US Policy Research Working Paper;No. 7853 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank World Bank, Washington, DC Publications & Research Publications & Research :: Policy Research Working Paper United States
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	English en_US
topic	inequality inequality of opportunity opportunity growth poverty poor
spellingShingle	inequality inequality of opportunity opportunity growth poverty poor Marrero, Gustavo A. Rodriguez, Juan Gabriel van der Weide, Roy Unequal Opportunity, Unequal Growth
geographic_facet	United States
relation	Policy Research Working Paper;No. 7853
description	This paper argues that inequality can be both good and bad for growth, depending on what inequality and whose growth. Unequal societies may be holding back one segment of the population while helping another. Similarly, high levels of income inequality may be due to a variety of different factors; some of these may be good while others may be bad for growth. The paper tests this hypothesis by “unpacking” both inequality and growth. Total inequality is decomposed into inequality of opportunity, due to observed factors that are beyond the individual's control, and residual inequality. Growth is measured at different steps of the income ladder to verify whether low, middle, and top income households fare differently in societies with high (low) levels of inequality. In an application to the United States covering 1960 to 2010, the paper finds that inequality of opportunity is particularly bad for growth of the poor. When inequality of opportunity is controlled for, the importance of total income inequality is dramatically reduced. These results are robust to different measures of inequality of opportunity and econometric methods.
format	Working Paper
author	Marrero, Gustavo A. Rodriguez, Juan Gabriel van der Weide, Roy
author_facet	Marrero, Gustavo A. Rodriguez, Juan Gabriel van der Weide, Roy
author_sort	Marrero, Gustavo A.
title	Unequal Opportunity, Unequal Growth
title_short	Unequal Opportunity, Unequal Growth
title_full	Unequal Opportunity, Unequal Growth
title_fullStr	Unequal Opportunity, Unequal Growth
title_full_unstemmed	Unequal Opportunity, Unequal Growth
title_sort	unequal opportunity, unequal growth
publisher	World Bank, Washington, DC
publishDate	2016
url	http://documents.worldbank.org/curated/en/2016/10/26854147/unequal-opportunity-unequal-growth http://hdl.handle.net/10986/25298
_version_	1764458894006943744

Unequal Opportunity, Unequal Growth

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