Resource information
This paper studies the relationship
between inequality of opportunity and development outcomes
in a cross-country setting. Scholars have long debated the
impact of inequality on growth, development, and the quality
of institutions in a society. The empirical relationships
are however confounded by the notion that
"inequality" can be seen as a composite of
inequality arising from differences in effort and ability,
which would tend to encourage competition and productivity,
and inequality attributable to unequal opportunities,
particularly in terms of access to basic goods and services,
which might translate to wasted human potential and lower
levels of development. The analysis in this paper applies a
measure of educational opportunities that incorporates
inequality between "types" or circumstance groups.
Theories from economic history are used to instrument for
this type of inequality in a large cross-country dataset.
The results seem to confirm the hypothesis that this measure
of inequality of opportunity is a better fit for structural
inequality than the Gini index of income. The results
suggest that inequality of endowments at the outset of
history led to unequal educational opportunities, which in
turn affected development outcomes such as institutional
quality, infant mortality, and economic growth. The findings
are robust to several checks on the instrumental variable specification.
