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Inequality of Opportunities and Long Term Earnings Measures: Evidence for Chile

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Author Info

  • Dante Contreras
  • Osvaldo Larrañaga
  • Esteban Puentes
  • Tomás Rau

Abstract

In this paper we assess the sensitivity of measures of inequality of opportunity to long-term earnings data. We compare indicators using four and seven year earnings with indicators that use the most commonly available yearly and monthly earnings. We argue that four and seven year earnings are preferable since they are a more precise measure of permanent income and are less affected by short-term variability. We use data available for Chile and found that the use of seven and four year earnings produces a 25% higher share of inequality of opportunity compared to yearly and monthly earnings measures. We find that parental education contributes most to income inequality in Chile. Finally, we perform Monte Carlo simulations, finding that our results are robust to several income processes.

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Bibliographic Info

Paper provided by University of Chile, Department of Economics in its series Working Papers with number wp352.

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Length: 32 pages
Date of creation: Apr 2012
Date of revision:
Handle: RePEc:udc:wpaper:wp352

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Web page: http://www.econ.uchile.cl/
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  1. Gosling, Amanda & Machin, Stephen & Meghir, Costas, 2000. "The Changing Distribution of Male Wages in the U.K," Review of Economic Studies, Wiley Blackwell, vol. 67(4), pages 635-66, October.
  2. Daniele Checchi & Vito Peragine, 2010. "Inequality of opportunity in Italy," Journal of Economic Inequality, Springer, vol. 8(4), pages 429-450, December.
  3. Francisco H. G. Ferreira & Jérémie Gignoux, 2011. "The Measurement Of Inequality Of Opportunity: Theory And An Application To Latin America," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 57(4), pages 622-657, December.
  4. Ricardo Paes de Barros & Francisco H. G. Ferreira & Jose R. Molinas Vega & Jaime Saavedra Chanduvi, 2009. "Measuring Inequality of Opportunities in Latin America and the Caribbean," World Bank Publications, The World Bank, number 2580, October.
  5. David Bravo & Jere R. Behrman & Olivia s. Mitchell & Petra E. Todd. & Javiera Vásquez, 2008. "Encuesta de protección social 2006: Presentación general y principales resultados," Working Papers wp273, University of Chile, Department of Economics.
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  1. Inequality of Opportunities and Long Term Earnings Measures: Evidence for Chile
    by Maximo Rossi in Wikiprogress América Latina on 2012-05-29 12:14:00

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