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Measuring long-term inequality of opportunity

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  • Rolf Aaberge
  • Magne Mogstad
  • Vito Peragine

    ()
    (Statistics Norway)

Abstract

In this paper, we introduce and apply a general framework for evaluating long-term income distributions according to the Equality of Opportunity principle (EOp). 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.

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Bibliographic Info

Paper provided by Research Department of Statistics Norway in its series Discussion Papers with number 620.

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Date of creation: May 2010
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Handle: RePEc:ssb:dispap:620

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

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  1. Leitura do dia
    by Erik Figueiredo in Moral Hazard on 2010-11-25 18:42:00
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