Inequality of Opportunity in Mexico

Abstract

Mexico is a country with high levels of inequality and low intergenerational

social-mobility rates for those located at the bottom extremes of the wealth

distribution. Although such low rates suggest that at least a share of the

observed income inequality may be due to an unequal distribution of

opportunities, this conjecture has not been thoroughly tested in the

literature. The present article fills this gap estimating the lower bound of

the contribution of unequal opportunities to income and wealth inequality

in Mexico, with an operationalization of the “ex-ante” approach to the

measurement of inequality of opportunity. Relying on a national

representative survey designed for the analysis of social mobility, namely,

the ESRU Survey on Social Mobility in Mexico (2011), we are able to define

a broad set of circumstance groups (“types”), encompassing the wealth of

the household of origin. This available information reduces the omitted

variable bias of previous estimations and allows for a better account of the

role of inequality of opportunity in income inequality. Our results show that

the lower bound of the contribution of unequal opportunities to total

income inequality and total wealth inequality is around 30 per cent, which

is substantially higher than previous estimations for Mexico and ranks

among the highest values in Latin America.