Social Spending, Distribution, and Equality of Opportunities: The Opportunity Incidence Analysis

Abstract

This paper proposes an additional extension to the traditional Benefit Incidence Analysis (BIA) that links fiscal policies with the concept of equality of opportunities. This new approach, “Opportunity Incidence Analysis” (OIA), is then piloted on three countries, Zambia, Tajikistan, and Paraguay. Three main contributions stand out: first, OIA complements traditional BIA, but increases its analytical resolution by incorporating other circumstances to incomes alone. Second, opportunities and circumstances can be used to target public spending with higher precision. Third, microsimulations can be used to understand the cost-effectiveness of alternative spending interventions that seek to improve equality of opportunities.