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Essays on inequality of opportunity: measurement, drivers and consequences

Carranza Navarrete, Rafael Ignacio (2021) Essays on inequality of opportunity: measurement, drivers and consequences. PhD thesis, London School of Economics and Political Science.

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Identification Number: 10.21953/lse.00004270


I study Inequality of Opportunity (IOp), its measurement, effects, and relationship to intergenerational persistence using empirical analysis based on data for highincome countries. Inequality of opportunity (IOp) is the part of inequality of outcomes attributable to differences in inherited circumstances. I provide evidence that IOp is higher than previously estimated, that it reduces economic growth, and that it accounts for an important part of intergenerational persistence. Chapter 2 provides lower and upper bound estimates of IOp for 24 European countries, between 2005 and 2011, using EU-Statistics on Income and Living Conditions (EU-SILC) data. Most estimates of IOp are lower bounds of its true level and provide a partial view of the importance of involuntarily inherited factors. My upper bound estimates account for up to 90.5%, almost as high as total inequality of outcomes. Inequality of outcomes is strongly correlated with the upper bound estimates of IOp, suggesting a close relationship between the two. Chapter 3 studies the effect of my upper bound estimates of IOp on short-term economic growth using System GMM regressions applied to data for 27 European countries covering the period 2005-2011. A one-standard-deviation increase in IOp results in a decrease in growth rates ranging from 1.2 to 3.1 percentage points. Inequality of outcomes also has a statistically significant effect on growth, albeit much less robust. These estimates suggest that while all income inequalities might hinder growth, IOp is particularly harmful. Chapter 4 studies the relationship between IOp and the intergenerational elasticity for individual earnings and family income. Using the Panel Study of Income Dynamics (PSID) I find that circumstances account for around 55% of the IGE. Parental education accounts for a quarter of the total contribution of circumstances, reflecting the importance of educational inequalities in the U.S.A. I also find that childhood circumstances have an important influence on the income of the offspring that is not accounted for by the IGE.

Item Type: Thesis (PhD)
Additional Information: © 2021 Rafael Ignacio Carranza Navarrete
Library of Congress subject classification: H Social Sciences > HC Economic History and Conditions
H Social Sciences > HM Sociology
H Social Sciences > HN Social history and conditions. Social problems. Social reform
Sets: Departments > Social Policy
Supervisor: Jenkins, Stephen P. and Özcan, Berkay

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