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Inequality of Opportunity in Brazil

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  • Bourguignon, François
  • Ferreira, Francisco
  • Menéndez, Marta

Abstract

This paper proposes a measure of the contribution of unequal opportunities to earnings inequality. Drawing on the distinction between ‘circumstance’ and ‘effort’ variables in John Roemer’s work on equality of opportunity, we associate inequality of opportunities with five observed circumstances which lie beyond the control of the individual – father’s and mother’s education; father’s occupation; race; and region of birth. The paper provides a range of estimates of the importance of these opportunity-forming circumstances in accounting for earnings inequality in one of the world’s most unequal countries. We also decompose the effect of opportunities into a direct effect on earnings and an indirect component, which works through the “effort” variables. The decomposition is applied to the distribution of male earnings in urban Brazil, in 1996. The five observed circumstances are found to account for between 10% and 37% of the Theil index, depending on cohort and allowing for the possibility of biased coefficient estimates due to unobserved correlates. On average, sixty percent of this impact operates through the direct effect on earnings. Parental education is the most important circumstance affecting earnings, but the occupation of the father and race also play a role.

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Bibliographic Info

Paper provided by Paris Dauphine University in its series Economics Papers from University Paris Dauphine with number 123456789/1552.

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Date of creation: Dec 2007
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Publication status: Published in Review of Income and Wealth, 2007, Vol. 53, no. 4. pp. 585-618.Length: 33 pages
Handle: RePEc:dau:papers:123456789/1552

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Related research

Keywords: Inequality of opportunity; earnings inequality; Brazil; Measurement and Analysis of Poverty; Welfare Programs;

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  1. Ferreira, Francisco H. G. & Paes de Barrios, Ricardo, 1999. "The slippery slope : explaining the increase in extreme poverty in urban Brazil, 1976-96," Policy Research Working Paper Series 2210, The World Bank.
  2. John Roemer & Julian R. Betts, 2003. "Equalizing educational opportunity through educational finance reform," Working Papers, University of California, Davis, Department of Economics 998, University of California, Davis, Department of Economics.
  3. Solon, Gary, 1999. "Intergenerational mobility in the labor market," Handbook of Labor Economics, Elsevier, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 29, pages 1761-1800 Elsevier.
  4. Hanushek, Eric A, 1986. "The Economics of Schooling: Production and Efficiency in Public Schools," Journal of Economic Literature, American Economic Association, vol. 24(3), pages 1141-77, September.
  5. Angus Deaton & Christina Paxson, 1993. "Intertemporal Choice and Inequality," NBER Working Papers 4328, National Bureau of Economic Research, Inc.
  6. Vito Peragine, 2004. "Ranking Income Distributions According to Equality of Opportunity," Journal of Economic Inequality, Springer, Springer, vol. 2(1), pages 11-30, April.
  7. Casey B. Mulligan, 1999. "Galton versus the Human Capital Approach to Inheritance," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 107(S6), pages S184-S224, December.
  8. Bowles, Samuel, 1972. "Schooling and Inequality from Generation to Generation," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 80(3), pages S219-S51, Part II, .
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  10. Jere R. Behrman & Alejandro Gaviria Uribe & Miguel Székely, 2001. "Intergenerational Mobility in Latin America," WORKING PAPERS SERIES. DOCUMENTOS DE TRABAJO, FEDESARROLLO 002914, FEDESARROLLO.
  11. Thomas Piketty, 1994. "Social Mobility and Redistributive Politics," Working papers, Massachusetts Institute of Technology (MIT), Department of Economics 94-15, Massachusetts Institute of Technology (MIT), Department of Economics.
  12. Lam, David & Schoeni, Robert F, 1993. "Effects of Family Background on Earnings and Returns to Schooling: Evidence from Brazil," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 101(4), pages 710-40, August.
  13. Charles F. Manski & John V. Pepper, 2000. "Monotone Instrumental Variables, with an Application to the Returns to Schooling," Econometrica, Econometric Society, Econometric Society, vol. 68(4), pages 997-1012, July.
  14. Kaivan Munshi & Mark Rosenzweig, 2006. "Traditional Institutions Meet the Modern World: Caste, Gender, and Schooling Choice in a Globalizing Economy," American Economic Review, American Economic Association, American Economic Association, vol. 96(4), pages 1225-1252, September.
  15. Solon, Gary, 1992. "Intergenerational Income Mobility in the United States," American Economic Review, American Economic Association, American Economic Association, vol. 82(3), pages 393-408, June.
  16. Behrman, Jere R & Birdsall, Nancy, 1983. "The Quality of Schooling: Quantity Alone is Misleading," American Economic Review, American Economic Association, American Economic Association, vol. 73(5), pages 928-46, December.
  17. Ferreira, Francisco H. G. & Lanjouw, Peter & Neri, Marcelo Cortes, 2002. "A Robust Poverty Profile for Brazil Using Multiple Data Sources," Economics Working Papers (Ensaios Economicos da EPGE) 444, FGV/EPGE Escola Brasileira de Economia e Finanças, Getulio Vargas Foundation (Brazil).
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    by Erik Figueiredo in Moral Hazard on 2010-09-24 19:31:00
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