Inequality of opportunity and social cohesion: Evidence from cross-country panel data

Social cohesion is widely recognized as a key feature of societies that promotes social harmony, human well-being and economic development. Given its importance, a growing body of research has sought to identify the economic, social, and institutional factors that shape social cohesion. However, the role of inequality of opportunity as a determinant of social cohesion has received limited attention in the existing literature, particularly in cross-country research. This study addresses this gap by examining the relationship between inequality of opportunity and social cohesion using an unbalanced panel dataset covering the period 1988–2017, with country coverage ranging from 87 to 162 countries across model specifications. To measure inequality of opportunity, overall income inequality is decomposed into inequality of circumstances and inequality of efforts. The empirical analysis employs panel regression models with country- and period-specific fixed effects. The results indicate that inequality of circumstances is negatively associated with social cohesion, whereas inequality of effort does not exhibit a statistically significant relationship with social cohesion. These findings suggest that inequalities rooted in circumstances are particularly detrimental to social cohesion and underscore the importance of equalizing opportunities and strengthening inclusive institutions to foster more cohesive societies.