Inequality of Opportunity in South Asia: The Puzzle of Educational Gains Without Consumption Gains

Maurizio Bussolo, Vito Peragine and Fabian Reutzel

No 11395, Policy Research Working Paper Series from The World Bank

Abstract: More than two decades of sustained economic growth in South Asia brought significant reductions in poverty, yet inclusive social progress has remained elusive. Using a pseudo-panel approach with a large-scale harmonized dataset of 20 million observations across seven South Asian countries, this paper traces the evolution of inequality of opportunity across cohorts born between 1950s and 1990s for three out-comes: education, labor markets, and consumption. The findings show substantial improvements in educational opportunities and unchanging high levels of inequality of opportunity in consumption. Three mechanisms explain this divergence. First, educational expansion focused on basic schooling for the 1950s to 1980s cohorts—a skill level with limited labor market returns. Second, despite narrowing gender gaps in educational attainment, female labor force participation remains stubbornly low across cohorts. Third, even among equally educated individuals, circumstances continue to predict labor outcomes, suggesting persistent structural barriers to labor market access and fair rewards.

Date: 2026-05-26
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