Inequality of Opportunity: Theory and Practice of Measurement Using RLMS-HSE Microdata

Abstract

This paper measures the opportunity inequality in the Russian Federation using a non-parametric approach. The paper uses data from the 20th round of the Russian Longitudinal Monitoring Survey — Higher School of Economics, which is a series of annual nation-wide representative surveys. Gender; type of township where the respondent was born; and educational status of the respondent’s parents were used as circumstance factors. The respondent’s income and earnings were chosen as the individual achievements. Calculations were made using two versions of the non-parametric approach: ex-ante, based on the “Min of Means” criterion, and ex-post, based on the “Mean of Mins” criterion. Several inequality indices, including Theil L index, Theil T index, and Atkinson’s A(1) and A(2) indices, were used in order to test the measurement reliability. According to the results obtained by our research team, in Russia, the contribution of opportunity inequality to earnings inequality is 18–24%, depending on the measurement procedure. The contribution of opportunity inequality to income inequality is somewhat less, 12–21%. The estimates obtained using the ex-post approach are higher than those using the ex-ante approach. Given that a limited number of circumstance factors were used in the research, it should be considered that the analysis performed allowed us to estimate the lower bound of the contribution of inequality of opportunities to the inequality of income and earnings in the Russian Federation.