Long-term evolution of inequality of opportunity: Educated parents still matter

Inequality of opportunity (IOp) in the four largest economies in Europe – France, Germany, Italy, and the United Kingdom – around 2015 accounts for a significant share of inequality of incomes, between 30 and 50 percent, depending on the inequality index and using a parametric approach. Mirroring the reduction of inequality of incomes over the last three decades, the long-term trend of IOp, the focus of this paper, has been declining for all countries but Italy. Declining trends are also observed for IOp estimated for age, gender, and birth cohorts sub-groups of the national populations. The closing of the gender gap accounts for a large share of the reduction of the IOp of the overall population. When decomposing age and birth cohort effects, the age effect of IOp exhibits an inverted U shape and, at the same age, IOp experienced by most recent cohorts is lower than preceding ones. To guide the interpretation of the observed declining trends, we use a theoretical framework describing the mechanisms through which changes in circumstances may be correlated to changes of inequality of opportunity. Three variables are considered by this framework: a) intergenerational persistence in educational attainment, b) return of education, and c) social origins. The first two variables are declining in all countries and are consistent with the reduction of IOp. However, ‘higher’ social origins seem to become increasingly more correlated with higher (labor) incomes and, in some countries (notably Italy), increasing relevance of this third variable slows down the overall reduction of IOp. Social origins, proxied by educated parents, remain significant even after controlling for parental resources (books at home when aged 14) or children’ skills (numeracy and literacy).