Inequality of outcomes and inequality of opportunities in Brazil

Abstract

This paper departs from John Roemer's formulation of the theory of equality of opportunities. It seeks to determine what part of observed outcome inequality may be attributed to differences in observed 'circumstances', including family background, and what part is due to 'personal efforts'. We use a micro-econometric technique to simulate what the distribution of outcomes would look like if 'circumstances' were the same for everybody. This technique is applied to Brazilian data from the 1996 household survey, both on the distribution of earnings for active individuals and on the distribution of household income per capita. It is shown that observed circumstances are a major source of outcome inequality in Brazil, probably more so than in other countries for which information is available. Yet, the level of inequality after equalizing circumstances remains very high. While a policy aimed at equalizing opportunities - through facilitating more equal access to schooling, for instance - might therefore be successful in lowering Brazilian inequality somewhat, more ambitious targets for inequality reduction may require more direct income redistribution.Inequality of Opportunities, Intergenerational Educational Mobility JEL Codes: D31, D63, J62