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Inequality of opportunities vs. inequality of outcomes: Are Western societies all alike?

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Author Info
Arnaud Lefranc () (Robert Schuman Center, European University Institute and THEMA, Université de Cergy-Pontoise.)
Nicolas Pistolesi () (THEMA, Université de Cergy-Pontoise.)
Alain Trannoy () (EHESS, GREQAM-IDEP)

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Abstract

This paper analyzes the relationship between income inequality and inequality of opportunities for income acquisition in nine developed countries during the nineties. We develop a new definition of equality of opportunity and show how it can be implemented empirically. Equality of opportunity is defined as the situation where income distributions conditional on social origin cannot be ranked according to stochastic dominance criteria. Stochastic dominance is assessed using non-parametric statistical tests. We measure social origin by parental education and occupation and use national household surveys to assess inequality of income and opportunities. USA and Italy show up as the most unequal countries both in terms of outcome and opportunity. At the opposite extreme, income distributions conditional on social origin are very close in Scandinavian countries even before any redistributive policy. The analysis highlights that inequality of outcome and inequality of opportunity can sometimes lead to different pictures. For instance, France and Germany experience a similar level of inequality of income but the former country is much more unequal than the latter from the point of view of equality of opportunity. Differences in rankings according to inequality of outcome and inequality of opportunity underscore the importance of the policymaker's choice of the conception of equality to promote.

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Paper provided by ECINEQ, Society for the Study of Economic Inequality in its series Working Papers with number 54.

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Length: 45 pages
Date of creation: 2006
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Handle: RePEc:inq:inqwps:ecineq2006-54

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Keywords: Equality of opportunity; Income inequality; Income distribution; Lorenz dominance.;

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Find related papers by JEL classification:
D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement

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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.:
  1. James K. Galbraith & Hyunsub Kum, 2005. "Estimating The Inequality Of Household Incomes: A Statistical Approach To The Creation Of A Dense And Consistent Global Data Set," Review of Income and Wealth, Blackwell Publishing, vol. 51(1), pages 115-143, 03. [Downloadable!] (restricted)
  2. Rothschild, Michael & Stiglitz, Joseph E, 1976. "Equilibrium in Competitive Insurance Markets: An Essay on the Economics of Imperfect Information," The Quarterly Journal of Economics, MIT Press, vol. 90(4), pages 630-49, November.
  3. Russell Davidson & Jean-Yves Duclos, 2000. "Statistical Inference for Stochastic Dominance and for the Measurement of Poverty and Inequality," Econometrica, Econometric Society, vol. 68(6), pages 1435-1464, November.
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  4. François Bourguignon & Francisco H. G. Ferreira & Marta Menendez, 2003. "Inequality of Outcomes and Inequality of Opportunities in Brasil," DELTA Working Papers 2003-24, DELTA (Ecole normale supérieure). [Downloadable!]
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  5. Atkinson, Anthony B., 1970. "On the measurement of inequality," Journal of Economic Theory, Elsevier, vol. 2(3), pages 244-263, September. [Downloadable!] (restricted)
  6. Sahn, David E & Younger, Stephen D & Simler, Kenneth R, 2000. "Dominance Testing of Transfers in Romania," Review of Income and Wealth, Blackwell Publishing, vol. 46(3), pages 309-27, September.
  7. Shorrocks, Anthony F, 1983. "Ranking Income Distributions," Economica, London School of Economics and Political Science, vol. 50(197), pages 3-17, February. [Downloadable!] (restricted)
  8. Peragine, Vitorocco, 1999. " The Distribution and Redistribution of Opportunity," Journal of Economic Surveys, Blackwell Publishing, vol. 13(1), pages 37-69, February. [Downloadable!] (restricted)
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Cited by:
(explanations, 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.)

  1. Laura Serlenga & Vito Peragine, 2007. "Higher education and equality of opportunity in Italy," Working Papers 79, ECINEQ, Society for the Study of Economic Inequality. [Downloadable!]
    Other versions:
  2. Ferreira , Francisco H. G. & Gignoux, Jeremie, 2008. "The measurement of inequality of opportunity : theory and an application to Latin America," Policy Research Working Paper Series 4659, The World Bank. [Downloadable!]
  3. François Bourguignon & Francisco Ferreira & Michael Walton, 2007. "Equity, efficiency and inequality traps: A research agenda," Journal of Economic Inequality, Springer, vol. 5(2), pages 235-256, August. [Downloadable!] (restricted)
    Other versions:
  4. Juan Rodríguez, 2008. "Partial equality-of-opportunity orderings," Social Choice and Welfare, Springer, vol. 31(3), pages 435-456, October. [Downloadable!] (restricted)
  5. Pedro Rosa Dias, 2009. "Inequality of opportunity in health: evidence from a UK cohort study," Health Economics, John Wiley & Sons, Ltd., vol. 18(9), pages 1057-1074. [Downloadable!]
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