Inequality of Opportunities in the Labor Market: Evidence from Life in Transition Surveys in Europe and Central Asia
Background Paper for the World Development Report 2013. Revised version published at IZA Journal of Labor & Development (2013), 2:7
40 Pages Posted: 16 Jan 2015
Date Written: January 14, 2015
The paper attempts to quantify the degree of inequality of opportunity in labor market outcomes for a selection of countries in the Europe and Central Asia (ECA) region. It adapts the Human Opportunity Index (HOI) methodology that has been widely used to study opportunities of children to measures of inequality in the labor market for working age adults, using data from the Life in Transition Surveys (LiTS) conducted in 2006. The observed inequalities are decomposed into components that are attributable to circumstances an individual was born into (e.g., gender, parents’ education, minority status) and other characteristics (education and age). Additional exercises are conducted with this measure: (i) comparisons with an expenditure-based measure of inequality of opportunity; (ii) the extent to which the measures of inequality resonate with individual perceptions of life satisfaction and fairness; and (iii) how the results for ECA countries compare with similar measures in the Latin America and the Caribbean (LAC) region. The findings show substantial inequality of opportunity (attributable to circumstances that an individual was born into) in employment status in the ECA region and a high degree of heterogeneity across countries in the circumstances that matter the most for inequality. The correlations between measures and perceptions of inequality among citizens across ECA countries suggest that inequality between groups, including measures of inequality of opportunity, matter more than overall measures of inequality for citizen perceptions of fairness.
Keywords: Inequality, equality of opportunity, labor markets, jobs, perceptions, Europe & Central Asia
JEL Classification: O11, O12, J21
Suggested Citation: Suggested Citation