Inequality of Opportunity in Income and Consumption in Egypt

We provide in this paper measures of inequality of opportunity of wages and consumption for Egypt at different points in time from 1988 to 2012. A standard way of measuring the degree of inequality of opportunity in a society is to choose a set of circumstances – characteristics of the individual’s environment that affect his future income and are beyond his control – and to partition the population into types, where a type is the set of individuals with the same circumstances. Inequality in the outcomes of interest between types is attributable to inequality of opportunity, whereas inequality within types is attributable to effort or luck. Although measures of inequality of wage income are increasing over time in Egypt starting in 1998, the share attributable to circumstances appears to be declining steadily throughout the whole period. We attribute this decline to the fact that outcomes for the middle class are moving closer to the outcomes of the lower classes. The outcomes for the most privileged groups remain quite different. Another possible explanation is that unobserved circumstances are playing a growing role in inequality of opportunity in Egypt.