Inequality of Outcomes and Inequality of Opportunities in Brazil

François Bourguignon Chief Economist of the World Bank presented "Inequality of Outcomes and Inequality of Opportunities in Brazil." The paper was written jointly with Francisco Ferreira and Marta Menéndez. Dr. Bourguignon’s discussant was Samuel Morley of the International Food Policy Research Institute

The paper, departing from John Roemer's theory of equality of opportunities, seeks to determine what part of observed outcome inequality may be attributed to differences in observed ‘circumstances’, including family background, and what part is due to ‘personal efforts.’ The authors use a micro-econometric technique to simulate what the distribution of outcomes would look like if ‘circumstances’ were the same for everybody. This technique is applied to Brazilian data from the 1996 household survey, both for earnings and for household incomes. It is shown that observed circumstances are a major source of outcome inequality in Brazil, probably more so than in other countries for which information is available. Nevertheless, the level of inequality after observed circumstances are equalized remains very high in Brazil.