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Inequality of Opportunities and Long Term Earnings Measures: Evidence for Chile

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  • Dante Contreras
  • Osvaldo Larrañaga
  • Esteban Puentes
  • Tomás Rau

Abstract

In this paper we assess the sensitivity of measures of inequality of opportunity to long-term earnings data. We compare indicators using four and seven year earnings with indicators that use the most commonly available yearly and monthly earnings. We argue that four and seven year earnings are preferable since they are a more precise measure of permanent income and are less affected by short-term variability. We use data available for Chile and found that the use of seven and four year earnings produces a 25% higher share of inequality of opportunity compared to yearly and monthly earnings measures. We find that parental education contributes most to income inequality in Chile. Finally, we perform Monte Carlo simulations, finding that our results are robust to several income processes.

Suggested Citation

  • Dante Contreras & Osvaldo Larrañaga & Esteban Puentes & Tomás Rau, 2012. "Inequality of Opportunities and Long Term Earnings Measures: Evidence for Chile," Working Papers wp352, University of Chile, Department of Economics.
    • Handle: RePEc:udc:wpaper:wp352
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    1. repec:wbk:wbpubs:2580 is not listed on IDEAS
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    4. Javier Núñez Errázuriz & Andrea Tartakowsky, 2009. "The relationship between Inequality of Outcomes and Inequality of Opportunities in a high-inequality country: The case of Chile," Working Papers wp292, University of Chile, Department of Economics.
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    6. David Bravo & Jere R. Behrman & Olivia s. Mitchell & Petra E. Todd. & Javiera Vásquez, 2008. "Encuesta de protección social 2006: Presentación general y principales resultados," Working Papers wp273, University of Chile, Department of Economics.
    7. Francisco H. G. Ferreira & Jérémie Gignoux, 2011. "The Measurement Of Inequality Of Opportunity: Theory And An Application To Latin America," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 57(4), pages 622-657, December.
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    1. Inequality of Opportunities and Long Term Earnings Measures: Evidence for Chile
      by Maximo Rossi in Wikiprogress América Latina on 2012-05-29 17:14:00

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