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Revisiting the Debate on Inequality and Economic Development

Author

Listed:
  • François Bourguignon

    (PSE - Paris-Jourdan Sciences Economiques - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique, PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement)

Abstract

This paper offers a selective survey of the abundant theoretical, empirical and policy-oriented literature on the relationship between inequality and development in the last 20 years or so. The main argument of this survey revolves around the necessary, but often ignored distinction to be made between the inequality of outcomes, including income or consumptions expenditures, and the inequality of opportunity as an obstacle to development. Theoretical justifications of a negative relationship between economic development and inequality indeed suggest that it is not the inequality of economic outcomes, income or consumption, per se that hinders economic development but other dimensions of economic and social inequality, including family background, access to the credit market, education, health care, security, justice and so-called "horizontal" inequality between ethnic groups or gender. It turns out that the inequality of income, on which the empirical literature focuses almost exclusively, is a very imperfect marker of this broader definition of inequality, that corresponds to the inequality of opportunity. At the same time, and somewhat paradoxically, correcting these various dimensions of inequality requires policies that imply some redistribution of income, even though income inequality is more a consequence than the main cause of those inequalities that actually hinder development.

Suggested Citation

  • François Bourguignon, 2015. "Revisiting the Debate on Inequality and Economic Development," PSE-Ecole d'économie de Paris (Postprint) halshs-01307779, HAL.
    • Handle: RePEc:hal:pseptp:halshs-01307779
    DOI: 10.3917/redp.255.0633
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    Cited by:

    1. Mark Lorenzen & Ram Mudambi & Andreas Schotter, 0. "International connectedness and local disconnectedness: MNE strategy, city-regions and disruption," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 0, pages 1-24.
    2. Mark Lorenzen & Ram Mudambi & Andreas Schotter, 2020. "International connectedness and local disconnectedness: MNE strategy, city-regions and disruption," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 51(8), pages 1199-1222, October.
    3. Acheampong, Alex O. & Dzator, Janet & Shahbaz, Muhammad, 2021. "Empowering the powerless: Does access to energy improve income inequality?," Energy Economics, Elsevier, vol. 99(C).
    4. Ronald Miranda‐Lescano & Leonel Muinelo‐Gallo & Oriol Roca‐Sagalés, 2023. "Human development and decentralization: The importance of public health expenditure," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 94(1), pages 191-219, March.

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