Unfair inequality and the role of circumstances: Two decades of inequality of opportunity in Colombia (2003-2023) (POLEI)
P4-S85-4
Presented by: Matthew Shaikh
Not all inequalities are created equal. Inequality resulting from inherited circumstances is considered by many to be more objectionable than inequality due to individual choices and effort. Providing equal opportunities for success, irrespective of a person’s background, is an important goal for public policy. Furthermore, whether inequality is seen as morally justifiable influences people’s attitudes towards inequality, redistribution and other public policies. This paper examines inequality of opportunity (IOP) in Colombia over the last 20 years – separating inequality due to circumstances (“unfair” inequality) and effort (“justifiable” inequality). We analyse IOP across time periods and birth cohorts, testing the sensitivity of estimates to alternative survey weighting. We use the Colombian Living Standards Survey with sex, birth region, ethnicity and parental education as circumstances, and calculate equivalised household income and individual income for labour market participants. We estimate inequality in the distribution of incomes resulting from circumstances (ex-ante IOP) via the Gini coefficient using both traditional approaches and data driven methods (trees and random forests). Our results show that inequality due to circumstances accounts for between 50-60% of total inequality, with estimated IOP of 0.33-0.36 for household equivalised income. Both total inequality and IOP increase after the mid-2010s, while IOP is similar across birth cohorts. Overall trends are robust to corrections in survey stratification, however, outlier estimates (2010 and 2018) are sensitive, with original estimates showing considerable bias. This demonstrates the important of examining survey data particularly in a multi-year context, as IOP estimates can be sensitive to survey stratification.
Keywords: inequality, inequality of opportunity, Colombia, Latin America, fairness