Inequality has often been cited as one of the leading sources of discontent in Egypt and one of
the causes of the 2011 revolution. However, there is no consensus on how much inequality
exists or what its root causes are. In this paper, we attempt to contribute to filling this gap by
estimating the extent to which factors related to the circumstances a person is born into
contribute to inequality of opportunity in earnings as well as in wealth or asset distribution. We
use three rounds of the Egypt Labor Market Panel Survey (ELMPS), spanning the period 1998
to 2012, to conduct the analysis. Our results indicate that circumstances account for a lower
bound of 9%-11% of inequality of opportunity in earnings and 30%-33% with respect to
inequality of asset distribution. We also find that area of birth and father’s education level are
the two most important circumstantial factors contributing to inequality of opportunity. Our
interpretation of the results is that the two measures are complementary in that earnings are
associated with flows, and assets are the stock of that and other flows over a longer period of
time. In that sense, inequality of opportunity in earnings gives a better indication of inequality
in the short run, while inequality in the household assets distribution gives a better sense of
inequality in the long run. This interpretation has important policy implications, suggesting the
need for two courses of action to bring about a more egalitarian society: the first is to limit
excessive variations in current earnings and the other is to narrow the degree of wealth
concentration.