Inequality of opportunity, income inequality, and economic mobility: Some international comparisons

Abstract

The relationship between inequality and the development process has long been of interest, and both directions of causality have been extensively investigated. The idea that the structural transformation that takes place as an economy develops may lead first to rising and then to falling inequality- known as the Kuznets (1955) hypothesis-was once hugely influential. The view that inequality may, in turn, affect the rate and nature of economic growth has an equally distinguished pedigree, dating back at least to Kaldor (1956). In the 1990s, a burgeoning theoretical literature suggested a number of mechanisms through which wealth inequality might be detrimental to economic growth, when combined with credit constraints and increasing returns, because of political channels, fertility effects, et cetera. See Voitchovsky (2009) for a recent survey of that literature.