Measuring Inequality of Opportunity: Does Inequality Index Matter?

• Main Authors: Zulfiya Ibragimova, Marina Frants
• Format: Article
• Language: English
• Published: Czech Statistical Office 2021-03-01
• Series: Statistika: Statistics and Economy Journal
• Subjects: inequality; inequality of opportunity; inequality indices
• Online Access: https://www.czso.cz/documents/10180/143570303/32019721q1_ibragimova_analyses.pdf/ae45bbfd-a734-4ce8-bbd6-bff26a7fe7bf?version=1.1

The equal opportunity theory is based on the idea that it is important to distinguish between two sources of inequality: the inequality caused by factors outside an individual's control (inequality of opportunity) and the inequality generated by factors within an individual’s control (inequality of effort). The aim of this study is to assess the impact of choosing an inequality index on the results of measuring the inequality of opportunity. The empirical analysis was carried out based on the data from Life in Transition III sociological survey. Important findings suggest that: 1) the choice of inequality measure has a significant impact on the outcome of measuring the inequality of opportunity; 2) within the methodology under consideration, when using the Gini index, the contribution of inequality of opportunity to the inequality in labor income turns out to be much greater than when using other measures of inequality with the direct method of assessment, and vice versa, noticeably less with the indirect method of assessment; 3) the L-Theil and T-Theil indices look more preferable to use; 4) a country's ranking in terms of absolute and relative inequality of opportunities changes depending on the choice of the measure of inequality and on the choice of the assessment method, sometimes quite significantly; 5) the ranking position for absolute inequality of opportunity may differ significantly from the ranking position for relative inequality.