To What Extent Does Inequality Of Opportunity Induce Income Inequality?

In the past 40 years of reform and opening up,along with the sustained high-speed growth of the economy,behind the development of the economy,China's income inequality has been widened and the social class has gradually been solidified,which has become an important obstacle to the comprehensive construction of a well-off society.In the background of increasing income gap in China,it is particularly important to explore to what extent the income inequality is “fair” and to what extent it is “unfair”.At present,the key for government to regulate the income inequality is to adjust the inequality of unfairness(the inequality of opportunity)as much as possible,and the precondition is to objectively and reasonably measure the extent to which opportunity inequality leads to income inequality.On this basis,the paper further analyzes the factors of circumstances and efforts that affect the inequality of opportunity.in order to provide a theoretical basis for the policy recommendations of narrowing inequality and achieve inclusive and shared growth centered on the equality of opportunity.This paper uses the Chinese General Social Survey data(CGSS)during the year 2008-2015,first of all,using the stochastic dominance method to determine whether the inequality of opportunity truly exits;Secondly,we use the regression tree method based on ex ante utilitarianism which proposed by Brunori et al.(2018)to identify the path in that the factors of circumstance's influence opportunity inequality.On this basis,the parameter estimation method is used to calculate the regression of the Mincer income equation and decompose the Shapley value.Furthermore,the variables of effort are included in the theoretical analysis of the opportunity inequality,and the variance decomposition method is used to compare the contribution of the factors of environment under the two circumstances of Roemer and Barry,and to test whether the factors of effort can eliminate the opportunity inequality.The results show that:(1)in general,there is a positive correlation between opportunity inequality and income inequality in China.The inequality of opportunity index in the year 2008-2015 shows a trend which goes downward and then rising,and falling again finally.In particular,the relative index of opportunity inequality in 2015 is 34.85%,far lower than the relative index of the average annual opportunity inequality which is 39.58%,showing that the inequality of opportunity in China has a narrowing trend.(2)Path analysis,in the environmental variables that affect the inequality of opportunity,the variables in the root node of the regression tree most strongly reject the null hypothesis of the opportunity,regarded as the split point of the regression tree.Other circumstance variables at the determined root node split in turn,interact,and jointly influence the opportunity inequality.(3)Specifically,among the environmental variables examined,regional variables and household registration variables are the two single factors that have the greatest impact on opportunity inequality,with annual average contributions of 10.00% and 8.68%.If we consider the comprehensive influence of family background variables,we find that the sum of the annual contribution of family culture capital,family economic capital and family social capital is as high as 11.34%,which shows that the phenomenon of “relying on parents” does really exit.(4)Further analysis shows that,if the factors of effort are included in the Mincer income equation,the individual education level has a significant positive impact on achieving individual high income level.Then through the variance decomposition method to compare the contribution of environment and effort in the two situations of39.58% of the opportunity inequality,but also affect the 14.82% of the opportunity inequality by influencing personal education indirectly.Therefore,to a certain extent,the factors of effort can eliminate the opportunity inequality caused by environmental factors.