Defining Circumstances: Francs or Ranks, Does it Matter?

Arnaud Lefranc2, Nicolas Pistolesi 1, Alain Trannoy3
1Toulouse school of Economics, France, 2THEMA, Universite de cergy-pontoise, France, 3EHESS GREQAM, France

We analyze equality of opportunity for earnings acquisition in France between 1973 and 1993. Individual circumstances are defined by parental earnings, which can be measured by either father's earnings level or father's rank in the earnings distribution. First, using stochastic dominance tools, we find that inequality of opportunity has remained stable when conditioning on the earnings level of the father, while it has diminished when conditioning on his rank in the earnings distribution. Then, we decompose the evolution of inequality of opportunity using the mean logarithmic deviation and the results of regressions of descendants'earnings on their parents earnings. The former result is explained by the stable intergenerational earnings elasticity. The latter by the decreasing wage inequality in the previous generation.

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