This paper evaluates how tax and transfer systems in Brazil and Peru affect equality of opportunity. Using detailed household data and tax–benefit microsimulation models, we decompose total income inequality into within-type and between-type components, where types are defined by predetermined circumstances such as parental background. We first measure inequality of opportunity in market incomes and then assess how much redistribution reduces it. The results show that existing fiscal systems achieve only modest reductions in overall inequality: the Gini coefficient falls by 0.02–0.08 points. Their impact on equality of opportunity is even smaller, with the between-types component declining by less than 0.01 Gini points in both countries. The paper also runs counterfactual simulations, including an analysis of the required redistribution to completely eradicate between-type inequality.
