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

Measuring Long-Term Inequality of Opportunity

Contents:

Author Info

  • Aaberge, Rolf

    ()
    (Statistics Norway)

  • Mogstad, Magne

    ()
    (University of Chicago)

  • Peragine, Vito

    ()
    (University of Bari)

Abstract

In this paper, we introduce and apply a general framework for evaluating long-term income distributions according to the Equality of Opportunity principle. Our framework allows for both an ex-ante and an ex-post approach to EOp. Our ex-post approach relies on a permanent income measure defined as the minimum annual expenditure an individual would need in order to be as well off as he could be by undertaking inter-period income transfers. There is long-term ex-post inequality of opportunity if individuals who exert the same effort have different permanent incomes. In comparison, the ex-ante approach focuses on the expected permanent income for individuals with identical circumstances. Hence, the ex-ante approach pays attention to inequalities in expected permanent income between different types of individuals. To demonstrate the empirical relevance of a long-run perspective on EOp, we exploit a unique panel data from Norway on individuals' incomes over their working lifespan.

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://ftp.iza.org/dp4714.pdf
Download Restriction: no

Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 4714.

as in new window
Length: 30 pages
Date of creation: Jan 2010
Date of revision:
Publication status: published in: Journal of Public Economics, 2011, 95 (3-4), 193-204
Handle: RePEc:iza:izadps:dp4714

Contact details of provider:
Postal: IZA, P.O. Box 7240, D-53072 Bonn, Germany
Phone: +49 228 3894 223
Fax: +49 228 3894 180
Web page: http://www.iza.org

Order Information:
Postal: IZA, Margard Ody, P.O. Box 7240, D-53072 Bonn, Germany
Email:

Related research

Keywords: permanent income; inequality; social welfare; equality of opportunity; intertemporal choice; ex-ante; ex-post;

Other versions of this item:

Find related papers by JEL classification:

This paper has been announced in the following NEP Reports:

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. François Bourguignon & Francisco H. G. Ferreira & Marta Menendez, 2003. "Inequality of Outcomes and Inequality of Opportunities in Brasil," DELTA Working Papers, DELTA (Ecole normale supérieure) 2003-24, DELTA (Ecole normale supérieure).
  2. John E. Roemer, . "To What Extent Do Fiscal Regimes Equalize Opportunities For Income Acquisition Among Citizens," Department of Economics, California Davis - Department of Economics 00-03, California Davis - Department of Economics.
  3. Magne Mogstad & Matthew Wiswall, 2009. "How Linear Models Can Mask Non-Linear Causal Relationships. An Application to Family Size and Children's Education," Discussion Papers, Research Department of Statistics Norway 586, Research Department of Statistics Norway.
  4. 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, International Association for Research in Income and Wealth, vol. 57(4), pages 622-657, December.
  5. William D. Nordhaus, 1972. "The Effects of Inflation on the Distribution of Economic Welfare," Cowles Foundation Discussion Papers, Cowles Foundation for Research in Economics, Yale University 329, Cowles Foundation for Research in Economics, Yale University.
  6. Laura Serlenga & Vito Peragine, 2007. "Higher education and equality of opportunity in Italy," Working Papers, ECINEQ, Society for the Study of Economic Inequality 79, ECINEQ, Society for the Study of Economic Inequality.
  7. Fleurbaey Marc, 1995. "Three Solutions for the Compensation Problem," Journal of Economic Theory, Elsevier, Elsevier, vol. 65(2), pages 505-521, April.
  8. Vito Peragine, 2004. "Measuring and implementing equality of opportunity for income," Social Choice and Welfare, Springer, Springer, vol. 22(1), pages 187-210, 02.
  9. Steven Haider & Gary Solon, 2006. "Life-Cycle Variation in the Association between Current and Lifetime Earnings," NBER Working Papers 11943, National Bureau of Economic Research, Inc.
  10. Peragine, Vitorocco, 2002. "Opportunity egalitarianism and income inequality," Mathematical Social Sciences, Elsevier, Elsevier, vol. 44(1), pages 45-64, September.
  11. King, Mervyn A., 1983. "Welfare analysis of tax reforms using household data," Journal of Public Economics, Elsevier, Elsevier, vol. 21(2), pages 183-214, July.
  12. François Bourguignon & Francisco Ferreira & Michael Walton, 2007. "Equity, efficiency and inequality traps: A research agenda," Journal of Economic Inequality, Springer, Springer, vol. 5(2), pages 235-256, August.
  13. Milton Friedman, 1957. "A Theory of the Consumption Function," NBER Books, National Bureau of Economic Research, Inc, National Bureau of Economic Research, Inc, number frie57-1.
  14. Rolf Aaberge & Ugo Colombino, 2010. "Accounting for Family Background when Designing Optimal Income Taxes. A Microeconometric Simulation Analysis," Discussion Papers, Research Department of Statistics Norway 619, Research Department of Statistics Norway.
  15. Marc Fleurbaey & Vito Peragine, 2013. "Ex Ante Versus Ex Post Equality of Opportunity," Economica, London School of Economics and Political Science, London School of Economics and Political Science, vol. 80(317), pages 118-130, 01.
  16. Porath Elchanan Ben & Gilboa Itzhak, 1994. "Linear Measures, the Gini Index, and The Income-Equality Trade-off," Journal of Economic Theory, Elsevier, Elsevier, vol. 64(2), pages 443-467, December.
  17. Rolf Aaberge & Ugo Colombino & Steinar Strøm, 2004. "Do more equal slices shrink the cake? An empirical investigation of tax-transfer reform proposals in Italy," Journal of Population Economics, Springer, Springer, vol. 17(4), pages 767-785, December.
  18. Shorrocks, Anthony, 1978. "Income inequality and income mobility," Journal of Economic Theory, Elsevier, Elsevier, vol. 19(2), pages 376-393, December.
  19. Fleurbaey, Marc, 2008. "Fairness, Responsibility, and Welfare," OUP Catalogue, Oxford University Press, Oxford University Press, number 9780199215911, October.
  20. Atkinson, Anthony B., 1970. "On the measurement of inequality," Journal of Economic Theory, Elsevier, Elsevier, vol. 2(3), pages 244-263, September.
  21. Arnaud Lefranc & Nicolas Pistolesi & Alain Trannoy, 2006. "Inequality of opportunities vs. inequality of outcomes: Are Western societies all alike?," Working Papers, ECINEQ, Society for the Study of Economic Inequality 54, ECINEQ, Society for the Study of Economic Inequality.
  22. Daniele Checchi & Vito Peragine, 2010. "Inequality of opportunity in Italy," Journal of Economic Inequality, Springer, Springer, vol. 8(4), pages 429-450, December.
  23. Vito Peragine, 2004. "Ranking Income Distributions According to Equality of Opportunity," Journal of Economic Inequality, Springer, Springer, vol. 2(1), pages 11-30, April.
  24. Becker, Gary S & Lewis, H Gregg, 1973. "On the Interaction between the Quantity and Quality of Children," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 81(2), pages S279-88, Part II, .
  25. Kydland, Finn E & Prescott, Edward C, 1982. "Time to Build and Aggregate Fluctuations," Econometrica, Econometric Society, Econometric Society, vol. 50(6), pages 1345-70, November.
  26. Checchi, Daniele & Peragine, Vito, 2005. "Regional Disparities and Inequality of Opportunity: The Case of Italy," IZA Discussion Papers 1874, Institute for the Study of Labor (IZA).
  27. Solon, Gary, 1999. "Intergenerational mobility in the labor market," Handbook of Labor Economics, Elsevier, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 29, pages 1761-1800 Elsevier.
  28. Weymark, John A., 1981. "Generalized gini inequality indices," Mathematical Social Sciences, Elsevier, Elsevier, vol. 1(4), pages 409-430, August.
  29. Roemer, J.E., 1992. "A Pragmatic Theory of Responsibility for the Egalitarian Planner," Papers, California Davis - Institute of Governmental Affairs 391, California Davis - Institute of Governmental Affairs.
  30. Robert E. Hall, 1981. "Intertemporal Substitution in Consumption," NBER Working Papers 0720, National Bureau of Economic Research, Inc.
  31. Oddbjørn Raaum & Kjell G. Salvanes & Erik O. Sørensen, 2006. "The Neighbourhood is Not What it Used to be," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 116(508), pages 200-222, 01.
  32. Mehran, Farhad, 1976. "Linear Measures of Income Inequality," Econometrica, Econometric Society, Econometric Society, vol. 44(4), pages 805-09, July.
  33. DONALDSON, David & WEYMARK, John A., . "Ethically flexible Gini indices for income distributions in the continuum," CORE Discussion Papers RP, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE) -520, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  34. Anders Bohlmark & Matthew J. Lindquist, 2006. "Life-Cycle Variations in the Association between Current and Lifetime Income: Replication and Extension for Sweden," Journal of Labor Economics, University of Chicago Press, University of Chicago Press, vol. 24(4), pages 879-900, October.
  35. Rolf Aaberge & Magne Mogstad, 2009. "On the Measurement of Long-Term Income Inequality and Income Mobility," ICER Working Papers, ICER - International Centre for Economic Research 09-2009, ICER - International Centre for Economic Research.
  36. Rolf Aaberge, 2006. "Gini’s Nuclear Family," Discussion Papers, Research Department of Statistics Norway 491, Research Department of Statistics Norway.
  37. Yaari, Menahem E., 1988. "A controversial proposal concerning inequality measurement," Journal of Economic Theory, Elsevier, Elsevier, vol. 44(2), pages 381-397, April.
  38. Aaberge, Rolf, 2001. "Axiomatic Characterization of the Gini Coefficient and Lorenz Curve Orderings," Journal of Economic Theory, Elsevier, Elsevier, vol. 101(1), pages 115-132, November.
  39. Rolf Aaberge, 2000. "Characterizations of Lorenz curves and income distributions," Social Choice and Welfare, Springer, Springer, vol. 17(4), pages 639-653.
  40. Deaton,Angus & Muellbauer,John, 1980. "Economics and Consumer Behavior," Cambridge Books, Cambridge University Press, Cambridge University Press, number 9780521296762.
  41. Davies, James B. & Shorrocks, Anthony F., 2000. "The distribution of wealth," Handbook of Income Distribution, Elsevier, in: A.B. Atkinson & F. Bourguignon (ed.), Handbook of Income Distribution, edition 1, volume 1, chapter 11, pages 605-675 Elsevier.
  42. Donaldson, David & Weymark, John A., 1980. "A single-parameter generalization of the Gini indices of inequality," Journal of Economic Theory, Elsevier, Elsevier, vol. 22(1), pages 67-86, February.
  43. Esfandiar Maasoumi & Mark Trede, 2001. "Comparing Income Mobility In Germany And The United States Using Generalized Entropy Mobility Measures," The Review of Economics and Statistics, MIT Press, vol. 83(3), pages 551-559, August.
  44. Milton Friedman, 1957. "Introduction to "A Theory of the Consumption Function"," NBER Chapters, National Bureau of Economic Research, Inc, in: A Theory of the Consumption Function, pages 1-6 National Bureau of Economic Research, Inc.
  45. Ebert, Udo, 1987. "Size and distribution of incomes as determinants of social welfare," Journal of Economic Theory, Elsevier, Elsevier, vol. 41(1), pages 23-33, February.
Full references (including those not matched with items on IDEAS)

Citations

Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  1. Leitura do dia
    by Erik Figueiredo in Moral Hazard on 2010-11-25 18:42:00
Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
This item has more than 25 citations. To prevent cluttering this page, these citations are listed on a separate page.

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:iza:izadps:dp4714. 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: (Mark Fallak).

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.