No. 1005: Unequal Societies with Equality of Opportunity
Giorgos Galanis Queen Mary University of London Roberto Veneziani Queen Mary University of London
July 21, 2026
Abstract
Is long-term income inequality consistent with equality of opportunity (EOp)? We study a dynamic economy in which one generation’s inequality shapes the socio-economic status, and hence the circumstances, of the next, with status a positional good governing the returns to effort. We show that a maximin EOp policy cannot sustain the welfare of full equality: from every starting point the intergenerational welfare floor lies strictly below its egalitarian level. A myopic, within-generation policy drives an initially more equal economy to an ever more unequal steady state. If the date of birth is taken as a circumstance too, the intergenerational EOp policy remains consistent with high and persistent inequalities in welfare, income, and status. EOp policies produce results that seem at odds with the general EOp ethic. For they may lead inequalities to remain constant or even increase over time, even though these inequalities are not the product of individual responsible choices.
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