The evolution of income classes in terms of inequality of opportunity: A full distributional approach

This paper proposes a full distributional approach to measure the probability of belonging to specific economic classes, which are endogenously determined by the individual s position in the income distribution. Using Australian panel data, we identify pre-determined circumstances associated with class membership. Specifically, we use concomitant variable latent class models to quantify the overlap between distributions and to compare distributional differences and segmentation across social classes and link them to inequality of opportunity. Given the renewed interest in social class dynamics and the growing socioeconomic relevance and political salience of class membership, this study provides important insights into the composition of socioeconomic classes and their evolution over time.