Inequality of opportunity, governance and individual beliefs

By J. Michelle Brock

Working Paper 213

A new EBRD Working Paper (number 213)

Inequality of opportunity – that is, how a person’s potential to succeed in life is determined by the circumstances of their birth – is the result of an economy that has failed to fairly tie incentive to effort and investment. But any limitations on economic activity caused by this failure may depend on whether people believe the system is unfair, and how well governing institutions safeguard fair play. This paper looks at whether inequality of opportunity corresponds to beliefs about fairness, and whether good governance can be a substitute for high levels of inequality of opportunity.

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