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Economic Policy and Equality of Opportunity

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  • Sang Yoon (Tim) Lee
  • Ananth Seshadri

Abstract

We employ equality of opportunity (EOP) definitions from the literature on distributive justice to a quantitative model featuring intergenerational human capital investments and luck. When calibrated to the US, the model‐implied degree of EOP differs substantially depending on whether one considers it ethical to reward offspring for the effort of previous generations. Despite reducing intragenerational inequality, education subsidies do little to promote EOP. This is because if one thinks intergenerational investments should be rewarded, there is little room for improvement to begin with; in the opposite case, much stronger redistribution is needed for the policies to have a quantitative impact.

Suggested Citation

  • Sang Yoon (Tim) Lee & Ananth Seshadri, 2018. "Economic Policy and Equality of Opportunity," Economic Journal, Royal Economic Society, vol. 128(612), pages 114-151, July.
    • Handle: RePEc:wly:econjl:v:128:y:2018:i:612:p:f114-f151
    DOI: 10.1111/ecoj.12480
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    Cited by:

    1. Koeniger, Winfried & Zanella, Carlo, 2022. "Opportunity and inequality across generations," Journal of Public Economics, Elsevier, vol. 208(C).
    2. Diego Daruich & Julian Kozlowski, 2020. "Explaining Intergenerational Mobility: The Role of Fertility and Family Transfers," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 36, pages 220-245, April.
    3. Bhashkar Mazumder, 2015. "Estimating the Intergenerational Elasticity and Rank Association in the U.S.: Overcoming the Current Limitations of Tax Data," Working Paper Series WP-2015-4, Federal Reserve Bank of Chicago.
    4. Yang, Xiaoliang & Zhou, Peng, 2022. "Wealth inequality and social mobility: A simulation-based modelling approach," Journal of Economic Behavior & Organization, Elsevier, vol. 196(C), pages 307-329.
    5. Paul Makdissi & Myra Yazbeck, 2023. "Measuring the contribution of stratification and social class at birth to inequality of opportunity," Working Papers 2303E Classification- I31, University of Ottawa, Department of Economics.
    6. De Nardi, Mariacristina & Yang, Fang, 2016. "Wealth inequality, family background, and estate taxation," Journal of Monetary Economics, Elsevier, vol. 77(C), pages 130-145.

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