Bitte verwenden Sie diesen Link, um diese Publikation zu zitieren, oder auf sie als Internetquelle zu verweisen: https://hdl.handle.net/10419/180423 
Erscheinungsjahr: 
2018
Schriftenreihe/Nr.: 
IZA Discussion Papers No. 11405
Verlag: 
Institute of Labor Economics (IZA), Bonn
Zusammenfassung: 
Estimates of the level of inequality of opportunity have traditionally been interpreted as lower bounds due to the downward bias resulting from the partial observability of circumstances that affect individual outcome. We show that such estimates may also suffer from upward bias as a consequence of sampling variance. The magnitude of the latter distortion depends on both the empirical strategy used and the observed sample. We suggest that, although neglected in empirical contributions, the upward bias may be significant and challenge the interpretation of inequality of opportunity estimates as lower bounds. We propose a simple criterion to select the best specification that balances the two sources of bias. Our method is based on cross-validation and can easily be implemented with survey data.To show how this method can improve the reliability of inequality of opportunity measurement, we provide an empirical illustration based on income data from 31 European countries. Our evidence shows that estimates of inequality of opportunity are sensitive to model selection. Alternative specifications lead to significant differences in the absolute level of inequality of opportunity and to the re-ranking of a number of countries. This confirms the need for an objective criterion to select the best econometric model when measuring inequality of opportunity.
Schlagwörter: 
inequality of opportunity
model selection
cross-validation
variance-bias trade-off
JEL: 
C52
D3
D63
Dokumentart: 
Working Paper

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