Inherited inequality and the distribution of opportunities in the United States, China, India, and South Africa

Abstract

Researchers have sought to quantify the extent of inequality that is inherited from previous generations in multiple ways, including a large body of work on intergenerational mobility and inequality of opportunity. Many of the most frequently used approaches to measuring mobility or inequality of opportunity fit within a general framework which involves, as a first step, an estimation of the extent to which inherited personal characteristics can predict current incomes. We suggest a new method, within that broad framework, which is sensitive to differences across the entire conditional distributions of relevant population subgroups, rather than just in their means – a feature that makes it particularly well-suited to measuring ex-post inequality of opportunity. Sensitivity to differences in higher moments of the conditional distributions allow for a more comprehensive assessment of inherited inequality. We apply this approach to household income distributions in China, India, South Africa, and the United States, to illustrate how the method performs in different settings. We find that inherited inequality accounts for large shares of total inequality, from 36% in the United States to 59% in China, 62% in India, and 81% in South Africa.