Measuring the contribution of racial stratification and social class at birth to inequality of opportunity

Abstract

This paper develops a framework for decomposing inequality of opportunity into racial stratification and social class components. We derive novel dominance conditions that enable robust rankings of joint distributions of income and birth circumstances, and develop additional dominance criteria for restricted classes of indices reflecting either pro-poor or meritocratic perspectives. Our framework includes an estimation approach and statistical tests for these stochastic dominance conditions, ensuring practical application with survey data. Using Health and Retirement Study data, we analyze inequality of opportunity in earnings among aging U.S. populations between 2010-2020. While social class-based inequality decreased for certain classes of indices, the racial stratification component increased, driving overall rising inequality of opportunity.