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Inequality of outcomes vs. inequality of opportunities in a developing country. An exploratory analysis for Chile

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  • Javier Núñez
  • Andrea Tartakowsky

Abstract

We apply a variation of Bourguignon, Meléndez and Ferreira (2005) methodology to examine the extent to which income inequality is associated with the inequality of observed exogenous circumstances of origin that determine individuals’ “opportunities” to pursue their chosen life plans. We find that equalizing a set of observed circumstances of origin across individuals such as parents’ schooling, parents’s stability of employment, father’s age, household size and growing in a single vs a bi-parental household reduces income inequality, but in a small margin, in the range of 8 to 13 points of the Gini coefficient, about a 15-20 per cent drop. These results are similar to those obtained by Bourguignon et al. (2005) for Brazil, although the dataset and the set of observed circumstances are partially different. These results suggest that a significant part of income inequality may be associated with unobserved heterogeneity across individuals unrelated to circumstances of origin, such as preferences, eff

Suggested Citation

  • Javier Núñez & Andrea Tartakowsky, 2007. "Inequality of outcomes vs. inequality of opportunities in a developing country. An exploratory analysis for Chile," Estudios de Economia, University of Chile, Department of Economics, vol. 34(2 Year 20), pages 185-202, December.
    • Handle: RePEc:udc:esteco:v:34:y:2007:i:2:p:185-202
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    References listed on IDEAS

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    Cited by:

    1. 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.
    2. Zhang, Yingqiang & Eriksson, Tor, 2010. "Inequality of opportunity and income inequality in nine Chinese provinces, 1989-2006," China Economic Review, Elsevier, vol. 21(4), pages 607-616, December.
    3. Haqiqi, Iman & Bahalou, Marziyeh & Hamidi, Razieh, 2014. "Measurement and Evaluation of Equality of Opportunity: A Numerical Look at Education, Health, and Income Inequality," MPRA Paper 95866, University Library of Munich, Germany.
    4. Boniface Ngah Epo & Francis Menjo Baye & Germano Mwabu & Martin N Etyang & Paul M Gachanja, 2023. "The Nexus between Poverty, Inequality and Growth: A Case Study of Cameroon and Kenya," Journal of African Economies, Centre for the Study of African Economies, vol. 32(Supplemen), pages 113-146.
    5. Cristian Ricardo Nogales Carvajal & Fátima Rico Encinas, 2015. "Efforts and inequality of opportunity in the Bolivian labor market," Investigación & Desarrollo, Universidad Privada Boliviana, vol. 2(1), pages 5-14.
    6. Haqiqi, Iman & Mortazavi Kakhaki, Morteza, 2012. "The Impact of Redistribution of Opportunities on Income Inequality: A CGE Approach," MPRA Paper 95819, University Library of Munich, Germany.
    7. Francisco Martínez & Bastian Sepúlveda & Hermann Manríquez, 2023. "Fractal Organization of Chilean Cities: Observations from a Developing Country," Land, MDPI, vol. 12(2), pages 1-21, January.
    8. Margarita Velín & Paúl Medina, 2011. "Estudio de la desigualdad de ingresos en el Ecuador considerando esfuerzos y herencias sociales," Analítika, Analítika - Revista de Análisis Estadístico/Journal of Statistical Analysis, vol. 1(1), pages 59-90, Junio.
    9. Fotso Koyeu, Fourier Prevost & Ningaye, Paul & Talla Fokam, Dieu Ne Dort, 2019. "How Does Inequality of Opportunities Affect the Distribution of Economic Wellbeing in Cameroon," MPRA Paper 92556, University Library of Munich, Germany.
    10. Francis Menjo Baye & Boniface Ngah Epo, 2015. "Impact of Human Capital Endowments on Inequality of Outcomes in Cameroon," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 61(1), pages 93-118, March.
    11. Nunez Javier I & Miranda Leslie, 2010. "Intergenerational Income Mobility in a Less-Developed, High-Inequality Context: The Case of Chile," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 10(1), pages 1-17, April.
    12. Francis Menjo Baye, 2015. "Impact of Education on Inequality Across the Wage Distribution Profile in Cameroon, 2005-10," WIDER Working Paper Series wp-2015-014, World Institute for Development Economic Research (UNU-WIDER).
    13. Francis Menjo Baye, 2015. "Impact of education on inequality across the wage distribution profile in Cameroon: 2005-10," WIDER Working Paper Series 014, World Institute for Development Economic Research (UNU-WIDER).

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    More about this item

    Keywords

    Income inequality; equality of opportunities.;

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement

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