How Does Inequality of Opportunity Persist from Education to Earning?: Some Recent Evidences from India

Introduction

The concept of inequality of opportunity emerged out of the concern that the ethical implications of inequality in outcome, as indicated by an individual’s achievement in certain dimension of well-being, are not straightforward. The ethical implication would depend on whether the inequality in outcome is due to the individual’s action for which s/he should be held responsible or it is due to the circumstances of the individual on which s/he has no control. Since inequality is presumed to be the result of both preferences of the individual and her/his circumstances, there is a need for isolating one from the other. It has been argued that the society should compensate individuals for the differences in circumstances, not for bad outcomes due to intentional choices (Dworkin, 1981a, 1981b; Arneson, 1989; Cohen 1989). Roemer (1993, 1996 & 1998) has made significant contributions in this area and he has developed an alternative ‘currency’ of egalitarian justice. Roemer makes a difference between ‘circumstances’ and ‘effort’. ‘Circumstances’ indicate the factors that influence the outcome but lie beyond the control of the individual. On the contrary, ‘effort’ is entirely due individual’s own choice of action. According to Roemer, ‘inequality of opportunity’ is that part of inequality, which is due to unequal circumstances. Roemer argues in favour of opportunity equalization and proposes an algorithm for ‘leveling the playing field’ for policy.

A few number of studies have appeared since Roemer’s seminal contribution (Peragine, 2004, Bourguignon, Ferreira & Menéndez, 2007; Ferreira & Giganoux, 2007 & 2011; Checchi & Peragine, 2005 & 2010; Checchi, Peragine & Serlenga, 2010; Singh, 2012), which have taken the concept of equality of opportunity further and dealt with the question of how it can be empirically implementable. There are broadly two alternative approaches to evaluation of inequality of opportunity – parametric and non-parametric. Inequality of opportunity can be assessed parametrically by considering an arbitrary functional form on the relationship between outcome, circumstances and efforts. The non-parametric approach does not presuppose any such functional form. In this approach, inequality of opportunity is assessed by using some additive subgroup decomposable measure of inequality after categorizing the population into types and tranches on the basis of the circumstances and efforts. The parametric approach allows us to include any number of circumstance variables in the model, and it enables us to capture the partial effects of individual circumstances, but it confronts the problem of endogeneity in the model.

First objectives of this study are to evaluate different approaches to assess inequality of opportunity, which have been stated above, and apply these methods to assess this inequality in Indian society in different outcome spaces. First, in this paper we assess inequality of opportunity non-parametrically in the distribution of weekly wages across the social and gender groups in India, by taking father’s education as a single circumstance variable. We follow the non-parametric method used by Checchi and Peragine (2010) to assess inequality of opportunity in Italy. Secondly, we assess inequality of opportunity in education in India by invoking the parametric approach by taking more than one circumstance variables in the analysis. Unlike the existing studies on the estimation of the contribution of inequality of opportunity in the outcome space, which has been done by the scholars and researchers, this parametric approach enables us to recognize the groups having poor circumstances in education, which allows us to state on the possible compensation policies to equalize opportunity in education in India. Second objective of this study is to reconcile the results of estimation under parametric and non-parametric methods of estimation of inequality of opportunity to examine the existence of the vicious circle between low education and low earnings in India. This enables us to perceive the reasons behind the between-group inequality in the outcome space.