Accounting for the Spouse when Measuring Inequality of Opportunity

Abstract

The existing literature on inequality of opportunity (IOp) has not addressed the question of how the circumstances and choices of spouses in a couple should be treated. By omitting information relevant to the spouse in IOp estimations, the implicit assumption has been full responsibility for the spouse’s income, effort and circumstance variables. In this paper, we discuss whether or not the spouse’s characteristics should be treated as responsibility factors. Using German micro data, we analyze empirically, how IOp estimates are affected when a spouse’s circumstance or effort variables are included in the analysis. We find that including spousal variables can increase IOp measures by more than 20 (35) percent for gross (net) earnings. The less responsibility assumed for the partner’s variables, the higher the IOp estimate.