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

Vincenzo Carrieri and Vito Peragine

No 357, Working Papers from ECINEQ, Society for the Study of Economic Inequality

Abstract: We propose a structural 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 shows 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: D60 D63 J62 (search for similar items in EconPapers)
Pages: 20 pages
Date: 2015-02
New Economics Papers: this item is included in nep-eur
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Working Paper: Decomposing inequality 'at work': Cross-country evidence from EU-SILC (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:inq:inqwps:ecineq2015-357

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