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The measurement of inequality of opportunity : theory and an application to Latin America

  • Ferreira , Francisco H. G.
  • Gignoux, Jeremie

What part of the inequality observed in a particular country is due to unequal opportunities, rather than to differences in individual efforts or luck? This paper estimates a lower bound for the opportunity share of inequality in labor earnings, household income per capita and household consumption per capita in six Latin American countries. Following John Roemer, the authors associate inequality of opportunity with outcome differences that can be accounted for by morally irrelevant pre-determined circumstances, such as race, gender, place of birth, and family background. Thus defined, unequal opportunities account for between 24 and 50 percent of inequality in consumption expenditure in the sample. Brazil and Central America are more opportunity-unequal than Colombia, Ecuador, or Peru."Opportunity profiles,"which identify the social groups with the most limited opportunity sets, are shown to be distinct from poverty profiles: ethnic origin and the geography of birth are markedly more important as determinants of opportunity deprivation than of outcome poverty, particularly in Brazil, Guatemala, and Peru.

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Paper provided by The World Bank in its series Policy Research Working Paper Series with number 4659.

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Date of creation: 01 Jul 2008
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Handle: RePEc:wbk:wbrwps:4659
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  1. Vito Peragine, 2004. "Ranking Income Distributions According to Equality of Opportunity," Journal of Economic Inequality, Springer, vol. 2(1), pages 11-30, April.
  2. Francois Bourguignon & Francisco H.B. Ferreira & Marta Menéndez, 2005. "Inequality of Opportunity in Brazil," Ibero America Institute for Econ. Research (IAI) Discussion Papers 133, Ibero-America Institute for Economic Research.
  3. Davidson, R. & Duclos, J.-Y., 1998. "Statistical Inference for Stochastic Dominance and for the Measurement of Poverty and Inequality," G.R.E.Q.A.M. 98a14, Universite Aix-Marseille III.
  4. Shorrocks, A F, 1980. "The Class of Additively Decomposable Inequality Measures," Econometrica, Econometric Society, vol. 48(3), pages 613-25, April.
  5. Elbers, Chris & Lanjouw, Peter & Mistiaen, Johan A. & Ozler, Berk, 2005. "Re-interpreting sub-group inequality decompositions," Policy Research Working Paper Series 3687, The World Bank.
  6. Van de Gaer, Dirk & Schokkaert, Erik & Martinez, Michel, 2001. "Three Meanings of Intergenerational Mobility," Economica, London School of Economics and Political Science, vol. 68(272), pages 519-37, November.
  7. Gary S. Field & Robert Duval Hernandez & Samuel Freije & Maria Laura Sanchez Puerta, 2007. "Intragenerational Income Mobility in Latin America," ECONOMIA JOURNAL OF THE LATIN AMERICAN AND CARIBBEAN ECONOMIC ASSOCIATION, ECONOMIA JOURNAL OF THE LATIN AMERICAN AND CARIBBEAN ECONOMIC ASSOCIATION.
  8. Bourguignon, Francois & Ferreira, Francisco H. G. & Walton, Michael, 2006. "Equity, Efficient and Inequality Traps: A Research Agenda," Working Paper Series rwp06-025, Harvard University, John F. Kennedy School of Government.
  9. John Roemer, 2006. "Review essay, “The 2006 world development report: Equity and development”," Journal of Economic Inequality, Springer, vol. 4(2), pages 233-244, August.
  10. Banerjee, Abhijit V & Duflo, Esther, 2003. " Inequality and Growth: What Can the Data Say?," Journal of Economic Growth, Springer, vol. 8(3), pages 267-99, September.
  11. Kristin J. Forbes, 2000. "A Reassessment of the Relationship between Inequality and Growth," American Economic Review, American Economic Association, vol. 90(4), pages 869-887, September.
  12. Arnaud Lefranc & Nicolas Pistolesi & Alain Trannoy, 2008. "Inequality Of Opportunities Vs. Inequality Of Outcomes: Are Western Societies All Alike?," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 54(4), pages 513-546, December.
  13. Alejandro Gaviria, 2007. "Social Mobility and Preferences for Redistribution in Latin America," ECONOMIA JOURNAL OF THE LATIN AMERICAN AND CARIBBEAN ECONOMIC ASSOCIATION, ECONOMIA JOURNAL OF THE LATIN AMERICAN AND CARIBBEAN ECONOMIC ASSOCIATION.
  14. Atkinson, Anthony B., 1970. "On the measurement of inequality," Journal of Economic Theory, Elsevier, vol. 2(3), pages 244-263, September.
  15. Gignoux, Jérémie & Cogneau, Denis, 2009. "Earnings inequalities and educational mobility in Brazil over two decades," Economics Papers from University Paris Dauphine 123456789/4402, Paris Dauphine University.
  16. Denis Cogneau & Thomas Bossuroy & Philippe De Vreyer & Charlotte Guénard & Victor Hiller & Phillippe Leite & Sandrine Mesplé-Somps & Laure Pasquier-Doumer & Constance Torelli, 2006. "Inequalities and equity in Africa," Working Papers DT/2006/11, DIAL (Développement, Institutions et Mondialisation).
  17. Bourguignon, Francois, 1979. "Decomposable Income Inequality Measures," Econometrica, Econometric Society, vol. 47(4), pages 901-20, July.
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