Abstract:
Integrating administrative data from the civil registry, social security, and national censuses, we provide novel evidence on intergenerational income mobility and equality of opportunity among 514,890 formal workers in Ecuador. Our results show substantial intergenerational mobility (rank-rank slope 0.22, elasticity 0.17). Formal employment substantially equalizes mobility: gender differences are minimal, and ethnic disparities are compressed, although ethnic minorities face barriers at the bottom. Model-based recursive partitioning (MOB) endogenously identifies 63 spatially homogeneous areas based on intergenerational income elasticity (IGE) and highlights a large degree of variation, with elasticities ranging from 0.09 to 0.23. We complement our analysis with a Roemerian equality of opportunity framework using transformation trees, which shows that equality of opportunity is relatively limited: the worst-off earn 74% of average income, and circumstances predict 33% of total inequality. Our findings suggest that stable formal employment serves as an important equalizing mechanism for intergenerational mobility among formal sector workers, though the persistent ethnic disparities and spatial heterogeneity we observe point to remaining challenges in achieving equality of opportunity across all groups and regions in Ecuador.
