Inequality of outcomes vs. inequality of opportunities in a developing country. An exploratory analysis for Chile
We apply a variation of Bourguignon, Meléndez and Ferreira (2005) methodology to examine the extent to which income inequality is associated with the inequality of observed exogenous circumstances of origin that determine individuals’ “opportunities” to pursue their chosen life plans. We find that equalizing a set of observed circumstances of origin across individuals such as parents’ schooling, parents’s stability of employment, father’s age, household size and growing in a single vs a bi-parental household reduces income inequality, but in a small margin, in the range of 8 to 13 points of the Gini coefficient, about a 15-20 per cent drop. These results are similar to those obtained by Bourguignon et al. (2005) for Brazil, although the dataset and the set of observed circumstances are partially different. These results suggest that a significant part of income inequality may be associated with unobserved heterogeneity across individuals unrelated to circumstances of origin, such as preferences, eff
Volume (Year): 34 (2007)
Issue (Month): 2 Year 2007 (December)
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Harvard Institute of Economic Research Working Papers
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- Javier Núnez & Roberto Gutiérrez, 2004. "Class discrimination and meritocracy in the labor market: evidence from Chile," Estudios de Economia, University of Chile, Department of Economics, vol. 31(2 Year 20), pages 113-132, December.
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- Jere R. Behrman, 2011. "How much might human capital policies affect earnings inequalities and poverty?," Estudios de Economia, University of Chile, Department of Economics, vol. 38(1 Year 20), pages 8-41, June.
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