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The Myth of Equal Opportunity in Germany?

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  • Valentina S. Consiglio
  • Denisa M. Sologon

Abstract

Providing equal opportunities to all members of society independent of an individual’s socio-economic background is a major objective of German policy makers. However, evidence on the access to education suggests that opportunities of children with a non-academic family background are still unequally obstructed. When analysing the labour market implications of this social disadvantage in human capital, social capital as an additional source of inequality often lacks attention. Drawing on the instrumental value of rather loose contacts (i.e. weak ties) on the labour market as revealed by Mark Granovetter (1974), this research paper goes beyond the human capital approach and includes a measure of instrumental social capital in the form of weak-tie career support in the earnings function. We shed light on the structure of the wage gap between those with and without an academic family background and complement an Oaxaca-Blinder decomposition with quantile regressions to analyse potential capital and return deficits separately. We find that a significant part of the wage gap can be explained by deficits that those from less educated families incur with respect to human and instrumental social capital. While the capital deficit due to educational attainment is larger, a non-academic family background is further associated with a significant deficit in returns to instrumental social capital at some parts of the distribution. As this suggests inequalities of opportunity on the German labour market to occur along the lines of parental education even beyond the education system, it urges policy makers to consider designing equality measures that do the same.

Suggested Citation

  • Valentina S. Consiglio & Denisa M. Sologon, 2019. "The Myth of Equal Opportunity in Germany?," SOEPpapers on Multidisciplinary Panel Data Research 1060, DIW Berlin, The German Socio-Economic Panel (SOEP).
  • Handle: RePEc:diw:diwsop:diw_sp1060
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    File URL: http://www.diw.de/documents/publikationen/73/diw_01.c.698609.de/diw_sp1060.pdf
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    References listed on IDEAS

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    1. Barrera-Osorio, F. & García-Moreno, V. & Patrinos, H., & Porta, E., 2011. "Using the Oaxaca-Blinder Decomposition Technique to Analyze Learning Outcomes Changes over Time: An Application to Indonesia’s Results in PISA Mathematics," Regional and Sectoral Economic Studies, Euro-American Association of Economic Development, vol. 11(3).
    2. Fabian Kosse & Thomas Deckers & Hannah Schildberg-Horisch & Armin Falk, 2016. "The Formation of Prosociality: Causal Evidence on the Role of Social Environment," Working Papers 2016-011, Human Capital and Economic Opportunity Working Group.
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    4. Owen O'Donnell & Eddy van Doorslaer & Adam Wagstaff & Magnus Lindelow, 2008. "Analyzing Health Equity Using Household Survey Data : A Guide to Techniques and Their Implementation," World Bank Publications, The World Bank, number 6896, December.
    5. Jann, Ben, 2008. "The Blinder–Oaxaca decomposition for linear regression models," Stata Journal, StataCorp LP, vol. 8(4), pages 1-27.
    6. Oaxaca, Ronald, 1973. "Male-Female Wage Differentials in Urban Labor Markets," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 14(3), pages 693-709, October.
    7. Breusch, T S & Pagan, A R, 1979. "A Simple Test for Heteroscedasticity and Random Coefficient Variation," Econometrica, Econometric Society, vol. 47(5), pages 1287-1294, September.
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    More about this item

    Keywords

    wage gap; (non-)academic family background; German labour market; Oaxaca-Blinder decomposition; quantile regression; human capital; instrumental social capital;

    JEL classification:

    • I24 - Health, Education, and Welfare - - Education - - - Education and Inequality
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J62 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Job, Occupational and Intergenerational Mobility; Promotion

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