Skip to main content

Equity, efficiency and inequality traps: A research agenda


This paper discusses a research agenda that arises from unanswered questions and unresolved issues considered in the World Bank’s World Development Report 2006: Equity and Development. After formalizing the key concepts of equity; equality of opportunity; and efficiency, and proposing a definition for an equitable development policy, the paper discusses the concept of inequality traps, around which the research agenda is structured. Four broad groups of research questions are highlighted: those revolving around the measurement of inequality of opportunity and the diagnostics for the existence of an inequality trap; those dealing with the causes of inequality traps; the quantification of their efficiency costs; and those related to how institutions (including governments) evolve to overcome inequality traps.

This is a preview of subscription content, access via your institution.


  1. 1.

    Acemoglu, D., Robinson, J.: Economic origins of dictatorship and democracy. Cambridge University Press, Cambridge, MA (2005)

    Google Scholar 

  2. 2.

    Acemoglu, D., Johnson, S., Robinson, J.: The colonial origins of comparative development: an empirical investigation. Am. Econ. Rev. 91(5), 1369–1401 (2001)

    Article  Google Scholar 

  3. 3.

    Alesina, A., Angeletos, G.-M.: Fairness and redistribution. Am. Econ. Rev. 95(4), 960–980 (2005)

    Article  Google Scholar 

  4. 4.

    Angrist, J., Bettinger, E., Bloom, E., King, E., Kremer, M.: Vouchers for private schooling in Colombia: evidence from a randomized natural experiment. Am. Econ. Rev. 92(5), 1535–1558 (2002)

    Article  Google Scholar 

  5. 5.

    Appadurai, A.: The capacity to aspire: culture and the terms of recognition. In: Rao, V., Walton, M. (eds.) Culture and Public Action. Stanford University Press, Stanford, CA. (2004)

    Google Scholar 

  6. 6.

    Araujo, M. Caridad, F., Francisco, L., Peter, Özler, B.: Local inequality and project choice: theory and evidence from Ecuador. World Bank Policy Research Working Paper Series #3997 (2006)

  7. 7.

    Arneson, R.: Equality of opportunity for welfare. Philos. Stud. 56, 77–93 (1989)

    Article  Google Scholar 

  8. 8.

    Atkinson, A.B., Stiglitz, J.E.: Lectures on Public Economics. McGraw-Hill, London (1980)

    Google Scholar 

  9. 9.

    Attanasio, O., Meghir, C., Santiago, A.: Education choices in Mexico: using a structural model and a randomized experiment to evaluate progresa. University College London, Processed (2001)

  10. 10.

    Baiocchi, G., Chaudhuri, S., Heller, P.: Evaluating Empowerment: Participatory Budgeting in Brazil. World Bank, Washington, DC Processed (2005)

    Google Scholar 

  11. 11.

    Baland, J.M., Platteau, J.P.: Wealth inequality and efficiency in the commons. Part I. The unregulated case. Oxf. Econ. Pap. 49(4), 451–482 (1997)

    Google Scholar 

  12. 12.

    Baland, J.M., Platteau, J.P.: Wealth inequality and efficiency in the commons. Part II. The regulated case. Oxf. Econ. Pap. 50(1), 1–22 (1998)

    Google Scholar 

  13. 13.

    Banerjee, A., Moohkerjee, D., Munshi, K., Ray, D.: Inequality, control rights, and rent seeking: sugar cooperatives in Maharastra. J. Polit. Econ. 109(1), 138–190 (2001)

    Article  Google Scholar 

  14. 14.

    Bardhan, P., Mookherjee, D.: Capture and governance at the local and national levels. AEA Papers and Proceedings 90(2), 135–139 (2000)

    Google Scholar 

  15. 15.

    Bardhan, P., Mookherjee, D.: Decentralizing antipoverty program delivery in developing countries. J. Public Econ. 89, 675–704 (2005)

    Article  Google Scholar 

  16. 16.

    Bénabou, R.: Unequal societies: income distribution and the social contract. Am. Econ. Rev. 90(1), 96–129 (2000)

    Article  Google Scholar 

  17. 17.

    Bénabou, R., Tirole, J.: Belief in a just world and redistributive politics. Q. J. Econ. 121(2), 699–746 (2006)

    Article  Google Scholar 

  18. 18.

    Besley, T., Burgess, R.: The political economy of government responsiveness: theory and evidence from India. Q. J. Econ. 117(4), 1415–1451 (2002)

    Article  Google Scholar 

  19. 19.

    Besley, T., Coate, S.: Lobbying and welfare in a representative democracy. Rev. Econ. Stud. 68, 67–82 (2001)

    Article  Google Scholar 

  20. 20.

    Besley, T., Pande, R., Rahman, L., Rao, V.: The politics of public good provision: evidence from Indian local governments. Journal of the European Economic Association 2, 416–426 (2004)

    Article  Google Scholar 

  21. 21.

    Betts, J., Roemer, J.: Equalizing Opportunity through Educational Finance Reform. mimeo, Public Policy Institute of California, San Francisco, CA (1999)

    Google Scholar 

  22. 22.

    Bourdieu, P.: The Logic of Practice. Stanford University Press, Stanford (1990)

    Google Scholar 

  23. 23.

    Bourguignon, F., Verdier, T.: Oligarchy, democracy, inequality and growth. J. Dev. Econ. 62(2), 285–313 (2000)

    Article  Google Scholar 

  24. 24.

    Bourguignon, F., Ferreira, F., Leite, P.: Conditional cash transfers, schooling, and child-labor: micro-simulating Brazil’s Bolsa Escola program. World Bank Econ. Rev. 17(2), 229–254 (2003)

    Article  Google Scholar 

  25. 25.

    Bourguignon, F., Ferreira, F., Menéndez, M.: Inequality of outcomes and inequality of opportunities in Brazil. World Bank Policy Research Working Paper Series 3174 (2003)

  26. 26.

    Buchanan, J.M.: A Hobbesian interpretation of the Rawlsian difference principle. Kyklos 29(1), 5–25 (1976)

    Google Scholar 

  27. 27.

    Chattopadhyay, R., Duflo, E.: Women as policy makers: evidence from a randomized policy experiment in India. Econometrica 72(5), 1409–1443 (2004)

    Article  Google Scholar 

  28. 28.

    Checchi, D., Peragine, V.: Regional disparities and inequality of opportunity: the case of Italy. IZA Discussion Paper No.1874 (2005)

  29. 29.

    Claessens, S., Perotti, E.: The links between finance and inequality: channels and evidence. Background paper for the WDR 2006 (2005)

  30. 30.

    Cohen, G.A.: On the currency of Egalitarian justice. Ethics 99, 906–944 (1989)

    Article  Google Scholar 

  31. 31.

    Dworkin, R.: What is equality? Part 2. Equality of resources. Philos. Public Aff. 10(3), 185–246 (1981)

    Google Scholar 

  32. 32.

    Engerman, S., Sokoloff, K.: Factor endowments, inequality and paths of development among new world economies. Economía 3(1), 41–110 (2002)

    Article  Google Scholar 

  33. 33.

    Engerman, S., Sokoloff, K.: The evolution of suffrage institutions in the new world. J. Econ. Hist. 65(4), 891–921 (2005)

    Article  Google Scholar 

  34. 34.

    Ferreira, F.H.G. Education for the masses? The interaction between wealth, educational and political inequalities. Econ. Transit. 9(2), 533–552 (2001)

    Article  Google Scholar 

  35. 35.

    Galasso, E., Ravallion, M.: Decentralized targeting of an antipoverty program. J. Public Econ. 89, 705–727 (2005)

    Article  Google Scholar 

  36. 36.

    Grossman, G., Helpman, E.: Protection for sale. Am. Econ. Rev. 84(4), 833–850 (1994)

    Google Scholar 

  37. 37.

    Haber, S., Kantor, S.: Getting Privatization Wrong: The Mexican Banking System, 1991–2003. Stanford University, Stanford, CA Processed (2004)

    Google Scholar 

  38. 38.

    Haber, S., Maurer, N.: Related Lending and Economic Performance: Evidence from Mexico. Stanford University, Stanford, CA Processed (2004)

    Google Scholar 

  39. 39.

    Heller, P.: The Labor of Development: Workers and the Transformation of Capitalism in Kerala, India. Cornell University Press, Ithaca, NY (1999)

    Google Scholar 

  40. 40.

    Hoff, K.: Paths of Institutional Development: A institutional development: a view from economic history. World Bank Res. Obs. 18(2), 205–226 (2003)

    Article  Google Scholar 

  41. 41.

    Hoff, K., Pandey, P.: Belief systems and durable inequalities: an experimental investigation of Indian caste. Washington, D.C.: World Bank Policy Research Working Paper Series 2875 (2004)

  42. 42.

    Hoff, K., Pandey, P.: Economic consequences of social identity: discrimination, social identity and durable inequalities. AEA Papers and Proceedings, May 2006, 206–211 (2006)

  43. 43.

    Kanbur, R. (ed.): Qualitative and quantitative poverty appraisal: Complementarities, tensions and the way forward. Delhi: Permanent Black (2003)

  44. 44.

    Khan, B. Zorina, S., Kenneth L.: Patent institutions, industrial organization and early technological change: Britain and the United States. In: Berg, M., Bruland, K. (eds.) Technological Revolutions in Europe. Elgar, Cheltenham, UK (1998)

    Google Scholar 

  45. 45.

    Krueger, A.O.: The political economy of the rent-seeking society. Am. Econ. Rev. 64(3): 291–303 (1974)

    Google Scholar 

  46. 46.

    Nozick, R.: Anarchy, State and Utopy. New York: Basic (1974)

    Google Scholar 

  47. 47.

    Piketty, T.: Social mobility and redistributive politics. Q. J. Econ. CX(3), 551–584 (1995)

    Article  Google Scholar 

  48. 48.

    Pistolesi, N., Lefranc, A., Trannoy, A.: Inequality of opportunities vs. inequality of outcomes: are Western societies all alike?. Mimeo, Université de Cergy-Pontoise (2005)

  49. 49.

    Rajan, R.G., Zingales, L.: Saving Capitalism from the Capitalists: Unleashing the Power of Financial Markets to Create Wealth and Spread Opportunity. Crown Business, New York (2003)

    Google Scholar 

  50. 50.

    Rajan, R.G., Zingales, L.: The persistence of underdevelopment: institutions, human capital, or constituencies? National Bureau of Economic Research Working Paper 12093 (2006)

  51. 51.

    Rao, V.: On ‘inequality traps’ and development policy. Development Outreach, February, 10–13 (2006)

  52. 52.

    Rao, V., Woolcock, M.: Integrating qualitative and quantitative approaches in program evaluation. In: Bourguignon, François, Pereira Da Silva, Luiz (eds.) Tool Kit for Evaluating the Poverty and Distributional Impact of Economic Policies. World Bank, Washington, DC (2003, Oxford University Press)

    Google Scholar 

  53. 53.

    Roemer, J.E.: Equality of Opportunity. Harvard University Press, Cambridge, MA (1998)

    Google Scholar 

  54. 54.

    Roemer, J.E.: The 2006 World Development Report: equity and development – a review. Journal of Economic Inequality 4, 233–244 (2006).

    Google Scholar 

  55. 55.

    Roemer, J.E., Aaberge, R., Colombino, U., Fritzell, J., Jenkins, S. P., Marx, I., Page, M., Pommer, E., Ruiz-Castillo J., Segundo, M.J.S., Traanes, T., Wagner, G., Zubiri, I.: To what extent do fiscal regimes equalize opportunities for income acquisition among citizens? J. Public Econ. 87, 539–565 (2003)

    Article  Google Scholar 

  56. 56.

    Sen, A.: Equality of what? In: McMurrin S. (ed.) Tanner Lectures on Human Values. Cambridge University Press, Cambridge, MA (1980)

    Google Scholar 

  57. 57.

    Sen, A.: Commodities and Capabilities. North Holland, Amsterdam (1985)

    Google Scholar 

  58. 58.

    Steele, C.M.: Thin ice: ‘stereotype threat’ and black college students. Atl. Mon. 284(2), 44–54 (1999)

    Google Scholar 

  59. 59.

    Tendler, J.: Good government in the tropics. Johns Hopkins University Press, Baltimore (1997)

    Google Scholar 

  60. 60.

    Thirumurthy, H., Zivin, J., Goldstein, M.: The economic impact of aids treatment: labor supply in Western Kenya. World Bank.(2006, Processed)

  61. 61.

    Todd, P.E., Wolpin, K.I.: Ex-ante evaluation of social programs. University of Pennsylvania (2005, Processed)

  62. 62.

    Van de Gaer, D., Schokkaert, E., Martínez, M.: Three meanings of intergenerational mobility. Economica 68, 519–537 (2001)

    Article  Google Scholar 

  63. 63.

    World Bank: World Development Report 2006: Equity and Development. World Bank, Washington, DC (2005, Oxford University Press)

    Book  Google Scholar 

Download references

Author information



Corresponding author

Correspondence to Francisco H. G. Ferreira.

Additional information

Bourguignon and Ferreira are in the Development Economics Vice-Presidency, The World Bank. Michael Walton is at the John F. Kennedy School of Government, Harvard University. Together, they led the team that produced the World Bank’s World Development Report 2006: Equity and Development.

Rights and permissions

Reprints and Permissions

About this article

Cite this article

Bourguignon, F., Ferreira, F.H.G. & Walton, M. Equity, efficiency and inequality traps: A research agenda. J Econ Inequal 5, 235–256 (2007).

Download citation

Key words

  • equity
  • equality of opportunity
  • inequality traps.