Discrimination and Equality of Opportunity

This paper presents a measure of social discrimination based on the principle of equality of opportunity. According to this principle we only have to care about the inequality derived from people’s differential circumstances (and not about outcome differences due to people’s diverse degree of effort). We propose approaching the measurement of group discrimination as the “welfare loss” attributed to the inequality between social groups of similar characteristics. We also provide an empirical application to the analysis of gender discrimination in the European labour market. We estimate wage equations to breakdown wage gaps and to control for extra individual heterogeneity. Given these predictions, we compute the index of welfare loss due to gender discrimination.