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Inequality of opportunity in the United Kingdom, 1991–2008

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  • Groot, Loek
  • van der Linde, Daan
  • Vincent, Charlotte

Abstract

We investigate the extent to which the tax-and-transfer system of the United Kingdom equalizes opportunities for income attainment among citizens. Within the framework of Roemer’s theory of Equality of Opportunity, and using individual data from the British Household Panel Survey from 1991 to 2008, we calculate the tax rates necessary to equalize opportunities for different circumstances. We provide a ranking of these circumstances by the degree to which they influence income attainment. Although pre-fisc equality of opportunity increases over time, the tax rate necessary to equalize opportunities remains higher than the observed tax rate. Only under a relatively high labour supply elasticity the observed UK tax rate fares well in equalizing opportunities for income attainment.

Suggested Citation

  • Groot, Loek & van der Linde, Daan & Vincent, Charlotte, 2018. "Inequality of opportunity in the United Kingdom, 1991–2008," Journal of Policy Modeling, Elsevier, vol. 40(6), pages 1255-1271.
    • Handle: RePEc:eee:jpolmo:v:40:y:2018:i:6:p:1255-1271
    DOI: 10.1016/j.jpolmod.2018.06.003
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    References listed on IDEAS

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    1. Fields, Gary S., 2007. "How much should we care about changing income inequality in the course of economic growth?," Journal of Policy Modeling, Elsevier, vol. 29(4), pages 577-585.
    2. Herzer, Dierk & Vollmer, Sebastian, 2013. "Rising top incomes do not raise the tide," Journal of Policy Modeling, Elsevier, vol. 35(4), pages 504-519.
    3. Roemer, John E. & Aaberge, Rolf & Colombino, Ugo & Fritzell, Johan & Jenkins, Stephen P. & Lefranc, Arnaud & Marx, Ive & Page, Marianne & Pommer, Evert & Ruiz-Castillo, Javier, 2003. "To what extent do fiscal regimes equalize opportunities for income acquisition among citizens?," Journal of Public Economics, Elsevier, vol. 87(3-4), pages 539-565, March.
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    5. Roemer, John E. & Aaberge, Rolf & Colombino, Ugo & Fritzell, Johan & Jenkins, Stephen P. & Lefranc, Arnaud & Marx, Ive & Page, Marianne & Pommer, Evert & Ruiz-Castillo, Javier, 2003. "To what extent do fiscal regimes equalize opportunities for income acquisition among citizens?," Journal of Public Economics, Elsevier, vol. 87(3-4), pages 539-565, March.
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    More about this item

    Keywords

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    JEL classification:

    • D19 - Microeconomics - - Household Behavior - - - Other
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household

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