A Tale of Two Sets of Opportunities. An exploration of Inequality of Opportunity among natives and second-generation immigrants in Sweden

Sammanfattning: This paper examines the extent of income inequality that is attributed inherited circumstances such as social and family background, denoted as Inequality of Opportunity or IOp, for natives and second-generation immigrants in Sweden. The measurement of Inequality of Opportunity captures the between-type inequality, when individuals are grouped into types based on these predetermined circumstances, which involves parametrically estimating the average outcome of each type and comparing these averages between types. Using data from the Generations and Gender survey for Sweden, IOp is measured separately for natives and second-generation immigrants, as well for the whole sample. Furthermore, the measure of IOp is decomposed using Shapley decomposition to deduce the relative contributions of the inherited circumstances to the IOp measure. The results suggest that 16-17% of income inequality is due to inherited circumstances for natives, 14- 25% for second-generation immigrants and 15-16% for the whole sample. Gender and parental background such as education and occupation appear to be largest contributors to IOp both when the analysis is performed separately for natives and second-generation immigrants and jointly for the whole sample.