Measuring educational inequalities: a method and an application to Albania

In this paper, we investigate whether educational inequalities stem from differences between families or within families. In a poor economy, schooling is costly for parents, and education is likely to be unequally distributed among siblings. Drawing on discrete ordered choice models, we present a simple method to estimate the between and within components of both the explained and unexplained variance in education. For our empirical analysis, we use the Living Standard Measurement Study survey conducted in 2002 in Albania. We explain about 40% of the total variance and find that inequalities in education are mainly due to differences between families. Differences within families are smaller and are far less easily explained.