Advanced Search
MyIDEAS: Login to save this paper or follow this series

Bounds of Unfair Inequality of Opportunity: Theory and Evidence for Germany and the US

Contents:

Author Info

  • Judith Niehues
  • Andreas Peichl

Abstract

Previous estimates of inequality of opportunity (IOp) are lower bounds because of the unobservability of the full set of endowed characteristics beyond the sphere of individual responsibility. Knowing the true size of unfair IOp, however, is important for the acceptance of (some) inequality and the design of redistributive policies as underestimating the true amount of IOp might lead to too little redistribution. This paper is the first to suggest an upper bound estimator. We illustrate our approach by comparing Germany and the US based on harmonized micro data. We find significant, sizeable and robust differences between lower and upper bound estimates - both for gross and net earnings based on either periodical or permanent income - for both countries. We discuss the cross-country differences and (surprising) similarities in IOp in the light of differences in social mobility and persistence.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://www.cesifo-group.de/portal/page/portal/DocBase_Content/WP/WP-CESifo_Working_Papers/wp-cesifo-2012/wp-cesifo-2012-05/cesifo1_wp3815.pdf
Download Restriction: no

Bibliographic Info

Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 3815.

as in new window
Length:
Date of creation: 2012
Date of revision:
Handle: RePEc:ces:ceswps:_3815

Contact details of provider:
Postal: Poschingerstrasse 5, 81679 Munich
Phone: +49 (89) 9224-0
Fax: +49 (89) 985369
Email:
Web page: http://www.cesifo.de
More information through EDIRC

Related research

Keywords: equality of opportunity; earnings inequality; mobility; circumstances; family background; redistribution;

Find related papers by JEL classification:

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. Bourguignon, François & Ferreira, Francisco & Menéndez, Marta, 2007. "Inequality of Opportunity in Brazil," Economics Papers from University Paris Dauphine 123456789/1552, Paris Dauphine University.
  2. Francisco H. G. Ferreira & Jérémie Gignoux, 2011. "The Measurement Of Inequality Of Opportunity: Theory And An Application To Latin America," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 57(4), pages 622-657, December.
  3. Mark Huggett & Gustavo Ventura & Amir Yaron, 2010. "Sources of Lifetime Inequality," Working Papers 2011-020, Human Capital and Economic Opportunity Working Group.
  4. Daniele Checchi & Vito Peragine, 2010. "Inequality of opportunity in Italy," Journal of Economic Inequality, Springer, vol. 8(4), pages 429-450, December.
  5. Rolf Aaberge & Ugo Colombino, 2010. "Accounting for Family Background when Designing Optimal Income Taxes. A Microeconometric Simulation Analysis," Discussion Papers 619, Research Department of Statistics Norway.
  6. Erwin OOGHE & Andreas PEICHL, 2010. "Fair and efficient taxation under partial control: theory and evidence," Center for Economic Studies - Discussion papers ces10.32, Katholieke Universiteit Leuven, Centrum voor Economische Studiën.
  7. Daniele Checchi & Vito Peragine & Laura Serlenga, 2010. "Fair and unfair income inequalities in Europe," CHILD Working Papers wp06_10, CHILD - Centre for Household, Income, Labour and Demographic economics - ITALY.
  8. Kurt Devooght, 2008. "To Each the Same and to Each his Own: A Proposal to Measure Responsibility-Sensitive Income Inequality," Economica, London School of Economics and Political Science, vol. 75(298), pages 280-295, 05.
  9. Björklund, Anders & Roine, Jesper & Waldenström, Daniel, 2008. "Intergenerational Top Income Mobility in Sweden – Capitalist Dynasties in the Land of Equal Opportunity?," Working Paper Series 775, Research Institute of Industrial Economics, revised 27 Sep 2010.
  10. Fong, Christina, 2001. "Social preferences, self-interest, and the demand for redistribution," Journal of Public Economics, Elsevier, vol. 82(2), pages 225-246, November.
  11. Philippe Van Kerm, 2004. "What Lies Behind Income Mobility? Reranking and Distributional Change in Belgium, Western Germany and the USA," Economica, London School of Economics and Political Science, vol. 71(281), pages 223-239, 05.
  12. Dale T. Mortensen & Bent Jesper Christensen & Jesper Bagger, 2010. "Wage and Productivity Dispersion: Labor Quality or Rent Sharing?," 2010 Meeting Papers 758, Society for Economic Dynamics.
  13. Almås, Ingvild & Cappelen, Alexander W. & Lind, Jo Thori & Sørensen, Erik Ø. & Tungodden, Bertil, 2011. "Measuring unfair (in)equality," Journal of Public Economics, Elsevier, vol. 95(7-8), pages 488-499, August.
  14. Marc Fleurbaey & Vito Peragine, 2009. "Ex ante versus ex post equality of opportunity," Working Papers 141, ECINEQ, Society for the Study of Economic Inequality.
  15. John Roemer, 2003. "To What Extent Do Fiscal Regimes Equalize Opportunities For Income Acquisition Among Citizens," Working Papers 03, University of California, Davis, Department of Economics.
  16. Foster, James E. & Shneyerov, Artyom A., 2000. "Path Independent Inequality Measures," Journal of Economic Theory, Elsevier, vol. 91(2), pages 199-222, April.
  17. Dolls, Mathias & Fuest, Clemens & Peichl, Andreas, 2009. "Automatic Stabilizers and Economic Crisis: US vs. Europe," IZA Discussion Papers 4310, Institute for the Study of Labor (IZA).
  18. Fleurbaey, Marc, 2008. "Fairness, Responsibility, and Welfare," OUP Catalogue, Oxford University Press, number 9780199215911, September.
  19. Lefranc, Arnaud & Pistolesi, Nicolas & Trannoy, Alain, 2009. "Equality of opportunity and luck: Definitions and testable conditions, with an application to income in France," Journal of Public Economics, Elsevier, vol. 93(11-12), pages 1189-1207, December.
  20. Alberto F. Alesina & Paola Giuliano, 2009. "Preferences for Redistribution," NBER Working Papers 14825, National Bureau of Economic Research, Inc.
  21. Piketty, Thomas, 1995. "Social Mobility and Redistributive Politics," The Quarterly Journal of Economics, MIT Press, vol. 110(3), pages 551-84, August.
  22. Amitabh Chandra, 2000. "Labor-Market Dropouts and the Racial Wage Gap: 1940-1990," American Economic Review, American Economic Association, vol. 90(2), pages 333-338, May.
  23. Angeletos, George-Marios & Alesina, Alberto, 2005. "Fairness and Redistribution," Scholarly Articles 4553009, Harvard University Department of Economics.
  24. Aaberge, Rolf & Mogstad, Magne & Peragine, Vito, 2010. "Measuring Long-Term Inequality of Opportunity," IZA Discussion Papers 4714, Institute for the Study of Labor (IZA).
  25. repec:ese:emodwp:em2-10 is not listed on IDEAS
  26. Dunnzlaff, Lina & Neumann, Dirk & Niehues, Judith & Peichl, Andreas, 2010. "Equality of Opportunity and Redistribution in Europe," IZA Discussion Papers 5375, Institute for the Study of Labor (IZA).
  27. Björklund, Anders & Jäntti, Markus & Lindquist, Matthew J., 2007. "Family Background and Income during the Rise of the Welfare State: Brother Correlations in Income for Swedish Men Born 1932-1968," IZA Discussion Papers 3000, Institute for the Study of Labor (IZA).
  28. Fleurbaey Marc, 1995. "Three Solutions for the Compensation Problem," Journal of Economic Theory, Elsevier, vol. 65(2), pages 505-521, April.
  29. Dustmann, Christian & Ludsteck, Johannes & Schönberg, Uta, 2007. "Revisiting the German Wage Structure," IZA Discussion Papers 2685, Institute for the Study of Labor (IZA).
  30. Heisz, Andrew & Corak, Miles, 1998. "The Intergenerational Earnings and Income Mobility of Canadian Men: Evidence from Longitudinal Income Tax Data," Analytical Studies Branch Research Paper Series 1998113e, Statistics Canada, Analytical Studies Branch.
  31. Thomas Piketty & Emmanuel Saez, 2006. "How Progressive is the U.S. Federal Tax System? A Historical and International Perspective," NBER Working Papers 12404, National Bureau of Economic Research, Inc.
  32. repec:ese:iserwp:2005-15 is not listed on IDEAS
  33. repec:ese:iserwp:2000-19 is not listed on IDEAS
  34. Nicolas Pistolesi, 2009. "Inequality of opportunity in the land of opportunities, 1968–2001," Journal of Economic Inequality, Springer, vol. 7(4), pages 411-433, December.
  35. Arnaud Lefranc & Nicolas Pistolesi & Alain Trannoy, 2008. "Inequality Of Opportunities Vs. Inequality Of Outcomes: Are Western Societies All Alike?," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 54(4), pages 513-546, December.
  36. Peichl, Andreas & Schneider, Hilmar & Siegloch, Sebastian, 2010. "Documentation IZAΨMOD: The IZA Policy SImulation MODel," IZA Discussion Papers 4865, Institute for the Study of Labor (IZA).
  37. Shorrocks, A F, 1980. "The Class of Additively Decomposable Inequality Measures," Econometrica, Econometric Society, vol. 48(3), pages 613-25, April.
  38. Blackburn, McKinley L., 2007. "Estimating wage differentials without logarithms," Labour Economics, Elsevier, vol. 14(1), pages 73-98, January.
  39. Gert G. Wagner & Joachim R. Frick & Jürgen Schupp, 2007. "The German Socio-Economic Panel Study (SOEP): Scope, Evolution and Enhancements," SOEPpapers on Multidisciplinary Panel Data Research 1, DIW Berlin, The German Socio-Economic Panel (SOEP).
  40. David H. Autor & Lawrence F. Katz & Melissa S. Kearney, 2008. "Trends in U.S. Wage Inequality: Revising the Revisionists," The Review of Economics and Statistics, MIT Press, vol. 90(2), pages 300-323, May.
  41. James E. Foster & Efe A. Ok, 1999. "Lorenz Dominance and the Variance of Logarithms," Econometrica, Econometric Society, vol. 67(4), pages 901-908, July.
Full references (including those not matched with items on IDEAS)

Citations

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:ces:ceswps:_3815. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Julio Saavedra).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.