Estimating Inequality of Opportunities in Punjab (Pakistan): A Non-Parametric Approach

This paper attempts to estimate inequality of opportunities in Punjab, Pakistan by using non-parametric approach. Household level data of Multiple Indicator Cluster Survey 2014 has been analyzed for this purpose. Household head’s income has been taken as an outcome. Three parental characteristics of household head have been used as circumstances. These characteristics include region of residence (rural/urban), wealth status and education level of household head’s father. Equalization of circumstances has been done by dividing our sample into different groups on the basis of above mentioned circumstances. Then within-group and among-groups inequality of income has been calculated. Within-group inequality has been attributed to the differences in the efforts of household heads. Among-group inequality has been attributed to the difference of circumstances and has been termed as inequality of opportunities. Our results indicate that up to 28% variation in income is due to the differences of circumstances. Among different circumstances, father’s education has the most significant contribution in explaining the variation of income of household heads. The study highlights the significance and need of compensatory government policies to cope with the problem of inequality of opportunities in Punjab (Pakistan). Provision of equal access to educational opportunities for all segments of the society is recommended as an important public policy measure to mitigate inequality of opportunities.