Long-Term Evolution of Inequality of Opportunity

28 Pages Posted: 16 Jan 2019 Last revised: 17 Jan 2019

See all articles by Maurizio Bussolo

Maurizio Bussolo

World Bank - Chief Economist Office for Europe and Central Asia

Daniele Checchi

Università degli Studi di Milano - Dipartimento di Economia Politica e Aziendale (DEPA); IZA Institute of Labor Economics; IRVAPP

Vito Peragine

University of Bari

Date Written: January 15, 2019

Abstract

The main goal of this paper is to document and analyze the long-term evolution of inequality of opportunity and thus extend the recent empirical literature, which is mainly concerned with its measurement at a specific point in time. Using repeated cross-section surveys for five European countries (France, Germany, Great Britain, Italy, and Switzerland), the evolution of inequality of opportunity is measured for a period of about two decades for the whole populations, as well as for different birth cohorts. Relative inequality of opportunity represents an important portion of total income inequality, with values ranging from 30 to 50 percent according to the standard deviation of logs (and reaching a lower share in case of mean log deviation) and, for all the countries, it shows a stable or declining time trend. When the birth cohorts are followed across time, inequality of opportunity decreases with age: the effect of circumstances seems to weaken over the life cycle. This is a quite different age profile from that of inequality of outcomes (income or consumption), which generally increases with age. A decomposition of the relative inequality of opportunity allows highlighting some key drivers of its time evolution. In all the countries, there has been a clear enhancement of equality of educational opportunity (as captured by a downward trending intergenerational education persistence) and a reduction of the returns to education. However, for some countries, notably Italy, these trends have failed to translate into decreasing inequality of opportunity in the income distribution because of the increasing role of parental networking (an additional channel through which parental background affects the incomes of offspring).

Keywords: Educational Sciences, Gender and Development, Rural Labor Markets, Labor Markets, Tertiary Education, Poverty Reduction Strategies

Suggested Citation

Bussolo, Maurizio and Checchi, Daniele and Peragine, Vito, Long-Term Evolution of Inequality of Opportunity (January 15, 2019). World Bank Policy Research Working Paper No. 8700. Available at SSRN: https://ssrn.com/abstract=3316477

Maurizio Bussolo (Contact Author)

World Bank - Chief Economist Office for Europe and Central Asia ( email )

1818 H Street, N.W.
Washington, DC 20433
United States

HOME PAGE: http://https://blogs.worldbank.org/team/maurizio-bussolo

Daniele Checchi

Università degli Studi di Milano - Dipartimento di Economia Politica e Aziendale (DEPA) ( email )

Milan, 20122
Italy
+39 02 5032 1519 (Phone)
+39 02 5032 1505 (Fax)

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

IRVAPP ( email )

Via Santa Croce 77
Trento, I-38122
Italy

Vito Peragine

University of Bari ( email )

Piazza Umberto I
Bari, 70121
Italy

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