Opportunities, Preferences and Incomes

William Nilsson

No 649, Umeå Economic Studies from Umeå University, Department of Economics

Abstract: The distinction between circumstances that constrain an individual’s opportunities and the individual choices also affecting a particular outcome is the main idea of theories of equality of opportunity. In this study, equality of opportunity is analyzed for Swedish data using a large set of variables indicating different circumstances likely to affect an individual’s opportunities. A semiparametric model is estimated to allow for a possible nonlinear relation between parental income and the income of the adult child. The reason is a hypothesis that a constrained investment behavior would make the relationship nonlinear. The results indicate significant inequality of opportunities. However, they do not indicate a nonlinear relationship between parental income and the income of the adult child. Thus, the hypothesis that low income families will have a constrained investment behavior in human capital formation is brought into question as the explanation of intergenerational income correlation in Sweden.

Keywords: equality of opportunity; intergenerational income mobility; preferences; tastes; semiparametric estimation (search for similar items in EconPapers)
JEL-codes: C14 D63 J62 (search for similar items in EconPapers)
Pages: 43 pages
Date: 2005-04-08
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Citations: View citations in EconPapers (6)

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