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Inequality of opportunity in Brazil

Listed author(s):
  • François Bourguignon

    (Banque Mondiale - Banque Mondiale)

  • Francisco H. G. Ferreira

    (Banque Mondiale - Banque Mondiale)

  • Marta Menéndez

    (UP9 - Université Paris 9, Dauphine - Université Paris-Dauphine, LEA - Laboratoire d'Economie Appliquée - INRA - Institut National de la Recherche Agronomique, PSE - Paris School of Economics)

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 percent of the Theil index, depending on cohort and allowing for the possibility of biased coefficient estimates due to unobserved correlates. On average, 60 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 HAL in its series Post-Print with number halshs-00754189.

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Length:
Date of creation: Dec 2007
Publication status: Published in Review of Income and Wealth, Wiley, 2007, 53 (4), pp.585-618. <10.1111/j.1475-4991.2007.00247.x>
Handle: RePEc:hal:journl:halshs-00754189
DOI: 10.1111/j.1475-4991.2007.00247.x
Note: View the original document on HAL open archive server: https://hal-pjse.archives-ouvertes.fr/halshs-00754189
Contact details of provider: Web page: https://hal.archives-ouvertes.fr/

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