The Threat of Inequality of Opportunity
Image credit: IMF Blog
There are clashing views on the relationship between income inequality and growth. Some have pointed to at least some measure of inequality as a necessary outcome of the rewards to innovation and risk-taking. Others have argued that excessive income inequality depresses investment in both human and physical capital, two key sources of long-term growth.
In recent research we argue that the crucial missing link in the inequality-growth relationship is inequality of opportunity.