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INEQUALITY OF OPPORTUNITY IN BRAZIL

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Errata

This article is corrected by:

  1. Errata: Inequality of Opportunity in Brazil: A Corrigendum Volume 59, Issue 3, 551–555, Article first published online: 3 May 2013

  • Note: The views expressed in this paper are solely those of the authors, and should not be attributed to The World Bank, its Board of Directors, or the countries they represent. We would like to thank Tony Atkinson, Ricardo Paes de Barros, Richard Blundell, Sam Bowles, Pedro Carneiro, Jishnu Das, Quy-Toan Do, Hanan Jacoby, Yoko Kijima, Stephan Klasen, Phillippe Leite, Costas Meghir, Thomas Piketty, Martin Ravallion, two anonymous referees and participants at many conferences and seminars for helpful comments. All remaining errors are ours.

*Francisco H. G. Ferreira, The World Bank, 1818 H. St. NW, Washington, DC 20433, U.S. (fferreira@worldbank.org).

Abstract

This paper proposes a measure of the contribution of unequal opportunities to earnings inequality. Drawing on the distinction between “circumstance” and “effort” variables in John Roemer's work on equality of opportunity, we associate inequality of opportunities with five observed circumstances which lie beyond the control of the individual—father's and mother's education; father's occupation; race; and region of birth. The paper provides a range of estimates of the importance of these opportunity-forming circumstances in accounting for earnings inequality in one of the world's most unequal countries. We also decompose the effect of opportunities into a direct effect on earnings and an indirect component, which works through the “effort” variables. The decomposition is applied to the distribution of male earnings in urban Brazil, in 1996. The five observed circumstances are found to account for between 10 and 37 percent of the Theil index, depending on cohort and allowing for the possibility of biased coefficient estimates due to unobserved correlates. On average, 60 percent of this impact operates through the direct effect on earnings. Parental education is the most important circumstance affecting earnings, but the occupation of the father and race also play a role.

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