Inequality of Origin and Earnings Prospect in France, 1977-1993

Abstract

To analyze equality of opportunity we examine the influence of family characteristics on the distribution of outcome for a given generation. Here, we study changes in equality of opportunity for income acquisition between 1977 and 1993, conditional on father's income level and income rank, using the FOP surveys. First, resorting to stochastic dominance criteria, we show that inequality of opportunity appears stable over this period, if one conditions on father's income level, but has decreased, if one conditions on father's income rank. Second, we offer an equality of opportunity index, based on the mean logarithmic deviation and show how to decompose the evolution over time of this index using standard intergenerational earnings regression analysis. Using this framework, we show that the first result arises from the stability over time in the intergenerational earnings elasticity while the second stems from a reduction in earnings inequality among fathers between 1977 and 1993. In other words, lower earnings inequality among parents, between these two dates, has translated into lower earnings inequality among children, although the strength of the association between the income of successive generations has remained unchanged.