Equality of Opportunity and Educational Achievement in Portugal

Portugal has one of the highest levels of income inequality in Europe, and low wages and unemployment are concentrated among low skill individuals. Education is an important determinant of inequality. However, there are large differences in the educational attainment of different individuals in the population, and the sources of these differences emerge early in the life-cycle when families play a central role in individual development. We estimate that most of the variance of school achievement at age 15 is explained by family characteristics. School inputs explain very little of adolescent performance. Children from highly educated parents benefit of rich cultural environments in the home and become highly educated adults. Education policy needs to be innovative: 1) it needs to explicitly recognize the fundamental role of families on child development; 2) it needs to acknowledge the failure of traditional input based policies. ∗ This paper was prepared for the 2006 Conference on Economic Development in Portugal organized by the Bank of Portugal. I thank the Bank of Portugal for hospitality and financial and research support. I also thank the hospitality of the Poverty Unit of the World Bank Research Group. Finally I thank Ana Rute Cardoso, Colm Harmon, Pedro Martins, Pedro Portugal and Vincent O'Sullivan for useful information on relevant data and bibliography for Europe and Portugal.