Advertisement

Trends in Inequality of Opportunity for Developing Countries: Does the Economic Indicator Matter?

  • Ana Suárez ÁlvarezEmail author
  • Ana Jesús López Menéndez
Original Research

Abstract

The aim of this paper is to shed some light on the behaviour of Inequality of Opportunity (IOp henceforth) in developing countries. The analysis is carried out using microdata collected by national surveys and harmonised by the Luxembourg Income Study (LIS). The LIS database incorporates a wide variety of personal harmonised variables, which allow us to made cross-country comparisons for developing countries. More specifically, we analyse six countries: Brazil, Egypt, Guatemala, India, Peru and South Africa and the periods of time covered vary from 2004 to 2014. In order to analyse the impact of inequality of opportunity we compute relative indicators by comparing IOp with economic inequality for each country analysed. Moreover, to check the robustness of our results we include two sensitivity analyses: first, we test the significance of overtime changes using inferential procedures and second, we assess if different economic indicators lead to different conclusions both in the evolution of IOp and overall inequality and in the relative weights of the circumstances that conform IOp. More specifically, regarding the first aim we focus on the disposable equivalised income to measure IOp and Income Inequality and we test if overtime changes are statistically significant using bootstrapping procedures. With regard to the second objective, to test the robustness of the results we compute IOp and Inequality for four different economic aggregates: Personal Income, Labour Personal Income, Consumption and Monetary Consumption. The empirical results of these analyses lead to two interesting conclusions: most of the overtime changes are found to be statistically significant and the use of a specific economic indicator is not as important as it at first seems, leading in most cases to the same conclusions.

Keywords

Inequality of opportunity Developing countries Income Consumption Circumstances 

Notes

Acknowledgements

The research leading to these results has received funding from the European Union’s Horizon 2020 research and innovation programme under Grant agreement No 730998, InGRID-2—Integrating Research Infrastructure for European expertise on Inclusive Growth from data to policy.

References

  1. Aran, M., Ferreira, F., & Gignoux, J. (2010). Measuring inequality of opportunity with imperfect data : The case of Turkey. In: World Bank—Policy research working paper 5204.Google Scholar
  2. Asadullah, M. N., & Yalonetzky, G. (2012). Inequality of educational opportunity in India: Changes over time and across states. World Development,40, 1151–1163.CrossRefGoogle Scholar
  3. Belhaj Hassine, N. (2012). Inequality of opportunity in Egypt. The World Bank Economic Review,26, 265–295.CrossRefGoogle Scholar
  4. Bickel, P. J., & Freedman, D. A. (1984). Asymptotic normality and the bootstrap in stratified sampling. The Annals of Statistics,12, 470–482.CrossRefGoogle Scholar
  5. Bourguignon, F., Ferreira, F., & Menéndez, M. (2007). Inequality of opportunity in Brazil. Review of Income and Wealth,53, 585–618.CrossRefGoogle Scholar
  6. Brunori, P. (2016). How to measure inequality of opportunity: A hands-on guide. In Life course centre working paper series 2016-04.Google Scholar
  7. Brunori, P., Ferreira, F. H. G., & Peragine, V. (2013). Inequality of opportunity, income inequality, and economic mobility: Some international comparisons. In Getting development right (pp. 85–115).Google Scholar
  8. Brunori, P., Hufe, P., & Mahler, D. G. (2018). The roots of inequality: Estimating in equality of opportunity from regression trees. In Ifo working papers no. 252.Google Scholar
  9. Brzezinski, M. (2015). Inequality of opportunity in Europe before and after the great recession. In ECINEQ WP 2015-353.Google Scholar
  10. Checchi, D., Peragine, V., & Serlenga, L. (2015). Income inequality and opportunity inequality in Europe: Recent trends and explaning factors. In 6th ECINEQ meeting conference paper.Google Scholar
  11. Choudhary, A., Muthukkumaran, G. T., & Singh, A. (2019). Inequality of opportunity in Indian women. Social Indicators Research, 145, 389–413.CrossRefGoogle Scholar
  12. Deaton, A. (1997). The analysis of household surveys: A microeconometric approach to development policy. Baltimore: Johns Hopkins University Press.CrossRefGoogle Scholar
  13. Efron, B., & Tibshirani, R. (1986). Bootstrap methods for standard errors, confidence intervals, and other measures of statistical accuracy. Statistical Science,1, 54–77.CrossRefGoogle Scholar
  14. Ferreira, F., & Gignoux, J. (2011). The measurement of inequality of opportunity: Theory and an application to Latin America. Review of Income and Wealth,57, 622–657.CrossRefGoogle Scholar
  15. Ferreira, F., & Peragine, V. (2015). Equality of opportunity: Theory and evidence. World bank policy research paper, 7217.Google Scholar
  16. Foster, J. E., & Shneyerov, A. A. (2000). Path independent inequality measures. Journal of Economic Theory,91, 199–222.CrossRefGoogle Scholar
  17. Marrero, G. A., & Rodríguez, J. G. (2012). Inequality of opportunity in Europe. Review of Income and Wealth,58, 597–621.CrossRefGoogle Scholar
  18. Palomino, J. C., Marrero, G. A., & Rodríguez, J. G. (2016). Channels of inequality of opportunity: The role of education and occupation in Europe. In ECINEQ WP 2016-411.Google Scholar
  19. Palomino, J. C., Marrero, G. A., & Rodríguez, J. G. (2019). Channels of inequality of opportunity: The role of education and occupation in Europe. Social Indicators Research,143, 1045–1074.CrossRefGoogle Scholar
  20. Piraino, P. (2015). Intergenerational earnings mobility and equality of opportunity in South Africa. World Development,67, 396–405.CrossRefGoogle Scholar
  21. Ramos, X., & Van de Gaer, D. (2016). Approaches to inequality of opportunity: Principles, measures and evidence. Journal of Economic Surveys,30, 855–883.CrossRefGoogle Scholar
  22. Ravallion, M. (2015). The Luxembourg Income Study. Journal of Economic Inequality,13, 527–547.CrossRefGoogle Scholar
  23. Roemer, J. E. (1998). Equality of opportunity. Cambridge: Harvard University Press.Google Scholar
  24. Roemer, J. E., & Trannoy, A. (2015). Equality of opportunity. In Handbook of income distribution (pp. 217–300). Amsterdam, Elsevier.Google Scholar
  25. Singh, A. (2012). Inequality of opportunity in earnings and consumption expenditure: The case of Indian men. Review of Income and Wealth,58, 79–106.CrossRefGoogle Scholar
  26. Song, Y., & Zhou, G. (2017). Inequality of opportunity and household education expenditures: Evidence from panel data in China inequality of opportunity and household education expenditures: Evidence from panel data in China. In ECINEQ WP 2017-439.Google Scholar
  27. Suárez-Álvarez, A., & López-Menéndez, A. J. (2017a). Income inequality and inequality of opportunity in Europe: Are they on the rise?. In ECINEQ WP 2017-436.Google Scholar
  28. Suárez-Álvarez, A., & López-Menéndez, A. J. (2018a). Assessing changes over time in inequality of opportunity: The case of Spain. Social Indicators Research,139, 989–1014.CrossRefGoogle Scholar
  29. Suárez-Álvarez, A., & López-Menéndez, A. J. (2018b) Income inequality and inequality of opportunity in Europe. Are they on the rise?. In Research on economic inequality: Inequality, taxation and intergenerational transmission (pp. 149–196).Google Scholar

Copyright information

© Springer Nature B.V. 2020

Authors and Affiliations

  1. 1.Department of Applied EconomicsUniversity of Oviedo, Campus del CristoOviedoSpain

Personalised recommendations