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Dissimilarity index for inequality of opportunity when the outcome is dichotom> ous

iopdepvarindepvars[if] [in] [,bootstrap(int)decompositiongroups(varname (max=1))propt(str)bootopt(str)]

DescriptionThis ado-file performs an analysis of inequality of opportunity in the access of

depvarbased on the methodology proposed by Paes de Barros et al. (2008). The main idea of the analysis is to capture the importance ofindepvarsin explaining differences indepvars, whereindepvarsare generally characteristics beyond individuals' control, thus they should not explaindepvarin a situation of equality of opportunity.The analysis is performed in the following way. First a simple probit model of

depvaronindepvarsis performed. In a second step the dissimilarity index is computed with the predicted values of the probit estimation. The idea is that all differences in these predicted values must be due to characteristics beyond individuals' control, thus they represent inequality of opportunity. A detailed description along with an application can be found in Soloaga & Wendelspiess Chávez Juárez (2012) Alternative routines are are mentioned below.

Options

bootstrap(int)Use this option to include bootstrap confidence intervals of the dissimilarity index by indicating the desired amount of repetitions. The default value is 0, resulting in no computation of bootstrap confidence intervals.

decompositionThis option includes a decomposition of the computed dissimilarity index. The same method is used and all but one variable is set to the average when computing the predicted values. Beware of the fact that the sum of these estimates does not necesarily yield to the total effect.

groups(varname (max=1))By activating this option, the decomposition across groups is perfomed. Indicate the categorical variable containing a definition of the groups.

propt(str)Use this option to include special options in the probit estimation. Just write your probit options normally and they are transmitted to the probit estimation in the script.

bootopt(str)Use this option to include special options in the bootstrap sampling. Just write your bootstrap options normally and they are transmitted to thebsamplecommand in the script.

Example

iopaccess_school education_father family_income indigenous, decomp boot(100)This example would calculate the inequality of opportunity in the access to schooling based on three explanatory variables: father's education, the family income and a dummy for indigenous people. Additionally the index is also computed for each of the independent variables individually and a bootstrap confidence interval for the main index is computed using 100 iterations.

An alternative routine to estimate the dissimilarity index is hoi. Compared to the current version ofAlternative routinesiopit performs almost the same calculation regarding dissimilarity index. Differences between the two routines include the estimation of the conditional probability (hoi uses logit instead of probit) and mainly the options the routine offers to the user. For inference,hoishould be preferred, since it computes not only the bootstrap standard errors but also the analytical standard errors.

The routineFuture developmentsiopwill be developped further. We plan to include several recent contributions to the measurement of inequality of opportunity in order to provide a routine that is able to deal not only with dichotomous variables, but also with continuous variables. If you have particular suggestions, please let us know. Otherwise, update the routine by typing scc install iop, replace

AuthorFlorian Wendelspiess Chávez Juárez & Isidro Soloaga: florian@chavezjuarez.com

Soloaga, Isidro and Florian Wendelspiess Chávez Juárez (2012). El comando iop para estimar desigualdad cuando el indicador es binario. Forthcoming in: Aplicaciones en Economía y Ciencias Sociales con Stata. Stata Press.ReferencesPaes de Barros, R and M. de Carvalho (2008). Measuring Inequality of Opportunity in Latin America and the Caribbean"

Paes de Barros, R and M. de Carvalho and S. Franco (2007). Preliminary Notes on the Measurement of Socially-Determined Inequality of Opportunity when the Outcome is Discrete". IPEA, Rio de Janeiro

Paes de Barros, Ricard and Francisco H. G. Ferreira and José R. Molinas Vega and Jaime Saavedra Chanduvi. Measuring Inequality of Opportunities in Latin America and the Caribbean-Inequality. The World Bank. 2009

Soloaga, Isidro and Florian Wendelspiess Chávez Juárez. Desigualdad de Oportunidades: aplicaciones al caso de México. IN: Movilidad Social en México: Población, desarrollo y crediciento, edited by Julio Serrano Espinosa and Florencia Torche. Centro de Estudios Espinosa Yglesias. Mexico City. 2010.