Born Where, Stuck Where? Spatial Inequality of Opportunity and Intergenerational Income Persistence in Multan, Pakistan

Abstract

This paper examines whether inequality of opportunity (IOp) and intergenerational income persistence differ between urban and rural areas using original household survey data from Multan District, Pakistan. We combine parametric and non-parametric Ferreira-Gignoux decompositions of the mean log deviation (MLD) with intergenerational elasticity (IGE) models that interact parental socioeconomic status with rural residence. The findings (which  we term the Multan Spatial Paradox) are as follows. First, the IGE is statistically indistinguishable across the urban-rural boundary and the interaction term is insignificant in every specification. Second, observable circumstances (gender, parental education and birth order) explain a substantially larger share of income inequality in urban areas than in rural areas and this gap holds across all MLD-based estimators. Third, rural Multan exhibits considerably higher total income inequality almost all of which arises within circumstance types. Subgroup regressions show that parental status, gender, education and experience significantly determine urban earnings whereas own education is the only significant predictor of rural earnings. We attribute the paradox to the informal agrarian economy in which income variation is driven by land, irrigation, livestock and seasonal labour demand, none of which enter the standard circumstance set. The urban advantage appears as a modest, near-parallel level premium rather than as stronger transmission of parental advantage. The results call for an expanded circumstance set in rural IOp studies and for policies that widen rural access to formal employment, secondary education and productive assets.