Decomposing inequality 'at work': Cross-country evidence from EU-SILC

Vincenzo Carrieri and Vito Peragine

Working papers from Società Italiana di Economia Pubblica

Abstract: We propose an empirical model to estimate inequality of opportunity (IOp) among workers and to distinguish two different sources of inequality: (i) inequality in the labour attachment and (ii) inequality in the remuneration of each working hour. Considering working hours as a measure of effort, our model can also be conceived as an attempt of disentangling the direct from the indirect contribution of circumstances to IOp. We estimate a system of seemingly unrelated regression equations and we use an original identification strategy based on a local market condition variable acting as exclusion restriction. By using data from the 2011 wave of the EU-SILC data base, we find in general a strong positive direct effect and a negative indirect effect of circumstances on overall IOp. Moreover, we are able to identify three cluster of countries: a first cluster includes continental countries (Italy, Spain, France) and Sweden, which show a low degree of IOp. A second cluster shows "moderate" levels of IOp and includes Finland and United Kingdom. A third cluster of countries show the highest levels of IOp and includes all eastern countries.

Keywords: inequality of opportunity; income inequality; labour attachment (search for similar items in EconPapers)
JEL-codes: D61 D63 J62 (search for similar items in EconPapers)
Date: 2014-12
New Economics Papers: this item is included in nep-eur and nep-lab
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Related works:
Working Paper: Decomposing inequality `at work': Cross-country evidence from EU-SILC (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:ipu:wpaper:15

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