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Inequality of Opportunity in Brazil

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

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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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 The Review of Income and Wealth, 2007, Vol. 53, no. 4. pp. 585-618.Length: 33 pages
Handle: RePEc:dau:papers:123456789/1552
Contact details of provider: Web page: http://www.dauphine.fr/en/welcome.html

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  1. Jere R. Behrman & Alejandro Gaviria & Miguel Székely, 2001. "Intergenerational Mobility in Latin America," Research Department Publications 4267, Inter-American Development Bank, Research Department.
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  7. Vito Peragine, 2004. "Ranking Income Distributions According to Equality of Opportunity," Journal of Economic Inequality, Springer, vol. 2(1), pages 11-30, April.
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  13. Griliches, Zvi & Mason, William M, 1972. "Education, Income, and Ability," Journal of Political Economy, University of Chicago Press, vol. 80(3), pages S74-S103, Part II, .
  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, vol. 96(4), pages 1225-1252, September.
  15. Casey B. Mulligan, 1999. "Galton versus the Human Capital Approach to Inheritance," Journal of Political Economy, University of Chicago Press, vol. 107(S6), pages S184-S224, December.
  16. Julian R. Betts & John E. Roemer, . "Equalizing educational opportunity through educational finance reform," Department of Economics 99-8, California Davis - Department of Economics.
  17. 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.
  18. Samuel Bowles & Herbert Gintis, 2002. "The Inheritance of Inequality," Journal of Economic Perspectives, American Economic Association, vol. 16(3), pages 3-30, Summer.
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