Equalizing Opportunities for Human Development (in One Country)

This study develops a framework to investigate the optimal allocation of a country's fiscal resources to help equalize opportunities for human development. The author argues that the proper role for policy is the pursuit of equality of opportunities as opposed to equality of outcomes. Because outcomes reflect the combination of a person's socioeconomic background and effort, the role of public policy is then to equate results conditional on effort. A stylized model formalizes this argument and provides insights on policy rules to equalize opportunities within a one country framework. The paper provides interesting reflections on political economy issues and suggests extending the framework to provide guidance to development institutions on the optimal allocation of lending resources across member countries with different socioeconomic conditions as to equate their opportunities.