Inherited Inequality, Meritocracy, and the Purpose of Economic Growth

Working Paper 2025-681

Abstract

This is a paper about inequality of opportunity and a closely related concept: inherited inequality. It does five things. First, it reviews the dominant economic model of inequality of opportunity, including its two main uses: the proposal of social objective functions and the measurement of inequality of opportunity. Second, it dispenses with two epistemically and normatively demanding assumptions that underlie the model and defines the closely related concept of inherited inequality. Although in practical terms the two are very similar, the latter rests on simpler, less demanding – and thus more solid – normative foundations. Third, it reviews recent advances in the measurement of inequality of opportunity and inherited inequality, focusing on data-driven solutions to model specification challenges. These methods are illustrated using UK data from 2009 to 2019. Fourth, the chapter proposes amending the standard static social objective functions proposed thirty years ago, towards a dynamic version that is better suited to addressing the implications – and conditioning the nature – of economic growth. Finally, the chapter discusses the differences between inequality of opportunity and meritocracy, and their possible roles in a fair society and growing economy.

Authors: Francisco H. G. Ferreira, Paolo Brunori.