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Upper and Lower Bound Estimates of Inequality of Opportunity: A Cross‐National Comparison for Europe

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  • Rafael Carranza

Abstract

I provide lower and upper bound estimates of inequality of opportunity (IOp) for 32 European countries, between 2005 and 2019. Lower bound estimates use machine learning methods to address sampling variability. Upper bound estimates use longitudinal data to capture all‐time invariant factors. Across all years and countries, lower bound estimates of IOp account from 6 percent to 60 percent of total income inequality, while upper bound estimates account from 20 percent to almost all income inequality. On average, upper bound IOp saw a slight decrease in the aftermath of the Great Recession, recovering and stabilizing at around 80 percent of total inequality in the second half of the 2010s. Lower bound estimates for 2005, 2011, and 2019 show a similar pattern. My findings suggest that lower and upper bound estimates complement each other, corroborating information and compensating each other's weaknesses, highlighting the relevance of a bounded estimate of IOp.

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  • Rafael Carranza, 2023. "Upper and Lower Bound Estimates of Inequality of Opportunity: A Cross‐National Comparison for Europe," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 69(4), pages 838-860, December.
  • Handle: RePEc:bla:revinw:v:69:y:2023:i:4:p:838-860
    DOI: 10.1111/roiw.12622
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    Cited by:

    1. Paolo Brunori & Paul Hufe & Daniel Mahler, 2023. "The roots of inequality: estimating inequality of opportunity from regression trees and forests," Scandinavian Journal of Economics, Wiley Blackwell, vol. 125(4), pages 900-932, October.
    2. Brunori, Paolo & Hufe, Paul & Mahler, Daniel Gerszon, 2021. "The Roots of Inequality: Estimating Inequality of Opportunity from Regression Trees and Forests," IZA Discussion Papers 14689, Institute of Labor Economics (IZA).
    3. Jenkins, Stephen P., 2022. "Getting the Measure of Inequality," IZA Discussion Papers 14996, Institute of Labor Economics (IZA).
    4. Dai, Xinchen & Li, Jing, 2021. "Inequality of opportunity in China: Evidence from pseudo panel data," China Economic Review, Elsevier, vol. 68(C).
    5. Rafael Carranza, 2020. "Inequality of Outcomes, Inequality of Opportunity, and Economic Growth," Working Papers 534, ECINEQ, Society for the Study of Economic Inequality.
    6. Brunori, Paolo & Hufe, Paul & Mahler, Daniel, 2023. "The roots of inequality: estimating inequality of opportunity from regression trees and forests," LSE Research Online Documents on Economics 118220, London School of Economics and Political Science, LSE Library.

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    JEL classification:

    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement

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