Inequality of opportunity in Brazil: decomposition of the sources of injustice between 2001 and 2014

Abstract

PurposeThis article aims to measure inequality of income and opportunities at the national and state levels in Brazil, highlighting their acceptable and unacceptable components.Design/methodology/approachTo this end, a lower-bound estimate of income inequality (MLD) and inequality of opportunity (IOp) was developed using data from the National Household Sample Survey between 2001 and 2014.FindingsIt shows that the disparity of income measured by the MLD decreased 26.7 percent, while IOp measured by the IOp decreased 25.6 percent during that period. The decline in total inequality can be attributed to a 48.5 percent decrease of its unfair component and 51.5 percent decrease of its fair component. The average income of the most disadvantaged group (non-white women working in the informal sector) is shown to be only 29.5 percent of the income of the most advantaged group (formally employed white men). The groups at the greatest disadvantage were most benefited by the increase in income.Originality/valueBeyond comparisons among countries, analysis at the subnational level make it possible to identify how the process that generates inequality acts in each state, revealing patterns undetected in the aggregate analysis. Its decomposition generates two products that are useful to policy-makers. The first is a base estimate of the degree of IOp present in society, which may be expressed as an indicator of the degree of IOp. The second examines the portion of total inequality attributable to IOp.