16 September 2010

Equal opportunity: where do we stand and does it make sense?

The issue of whether to promote equality of outcomes or of opportunity is not a new and has been raging between proponents of the left and of the right. Even where there is agreement that equality of opportunity is what should constitute the locus of our attention, it is not obvious how this imperative is best achieved or indeed against which benchmark we should assess whether we succeed.

As always a look at simple empirical data provides a set of tentative - and quite surprising - answers to these questions. One way to consider this question is to analyse the strength of the link betwen individual and parental earnings. Given radom distribution of abilities across the population, one can reasonably assume that this link should be small where equality of opportunity is ensured.

The figure below plots this link in a sample of OECD countries. Three things stand out upon casual scrutiny of the data:
1) Countries which put particularly strong emphasis on equality of opportunity, and how it is more appropriate than equality of outcomes, have particularly strong links between parents and children's pay. This is the case of Great Britain and the USA. These countries are characterised by means tested benefits and a decentralised structure of bargaining of wages across the economy with generally weak unions.

2) Countries that have high levels of equality of outcomes such as the Scandinavian countries have among the lowest links between parental and individuals earnings. These countries are characterised by universal benefits, high levels of coordination between the state and economic actors such as unions and employers and of bargaining coverage in wage agreements.

3) France and Italy have levels of earnings reproduction similar to the liberal UK and USA. This is particularly striking in the case of France which whole welfare and educational system is legitimated on the premise that it guarantees meritocracy prevail and equality is maintained.

 The influence of parents background on student achievement is one channel through which 'earnings reproduction' occurs. On this measure, France scores high; indeed almost as high or higher than the US depending on the measure one relies on. The southern countries such as Spain and particularly Italy do not seem to be driven by educational mediating factors in the 'earnings reproduction' dynamics. 

On the other hand, the Scandinavian countries do exhibit low correlation between students achievements and parental background. This suggests that equal opportunities in education is a necessary but not sufficient condition for mitigating the tendency of class reproduction in earnings distribution.

More generally, the distinction between equality of opportunity and of outcomes as an arbitrary and fallacious distinction. It is arbitrary because we should be concerned about how the system helps people realise their full potential while guaranteeing the highest standards of living to others, not about whether we should choose between presumably non conflicting objectives. In fact, it is not clear that these two 'types' of equality are mutually exclusive while one often hears that the focus on opportunity demonstrates that equality is unecessary.

The distinciton is also fallacious because how can society ensure equal opportunity in the context of ever increasing inequality of outcomes. More specifically, how can society compensates (and at what costs!?!) the natural inequality of opportunities generated by vast inequalities of opportunities? What would be required for the opportunity of the child of the lower income decile to be equivalent to that of a child born in a billionaire familly...

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