IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Login to save this article or follow this journal

Measuring long-term inequality of opportunity

  • Aaberge, Rolf
  • Mogstad, Magne
  • Peragine, Vito

In this paper, we introduce a new family of rank-dependent measures of inequality and social welfare consistent with the equality of opportunity (EOp) principle. The proposed framework can be used to measure long-term as well as short-term EOp, depending on whether we let permanent income or snapshots of income form the basis of the analysis. Furthermore, it allows for both an ex-ante and an ex-post approach to EOp. 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 differences in the expected permanent income between groups of individuals with identical circumstances. 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 life span. This allows us to examine how well analysis of opportunity inequality based on snapshots of income approximate the results based on permanent income.

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.sciencedirect.com/science/article/pii/S0047272710001830
Download Restriction: Full text for ScienceDirect subscribers only

As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

Article provided by Elsevier in its journal Journal of Public Economics.

Volume (Year): 95 (2011)
Issue (Month): 3 ()
Pages: 193-204

as
in new window

Handle: RePEc:eee:pubeco:v:95:y:2011:i:3:p:193-204
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/505578

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. 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 586, Research Department of Statistics Norway.
  2. Davies, James B. & Shorrocks, Anthony F., 2000. "The distribution of wealth," Handbook of Income Distribution, in: A.B. Atkinson & F. Bourguignon (ed.), Handbook of Income Distribution, edition 1, volume 1, chapter 11, pages 605-675 Elsevier.
  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.
  4. Robert E. Hall, 1981. "Intertemporal Substitution in Consumption," NBER Working Papers 0720, National Bureau of Economic Research, Inc.
  5. Milton Friedman, 1957. "A Theory of the Consumption Function," NBER Books, National Bureau of Economic Research, Inc, number frie57-1, June.
  6. 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).
  7. Weymark, John A., 1981. "Generalized gini inequality indices," Mathematical Social Sciences, Elsevier, vol. 1(4), pages 409-430, August.
  8. 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.
  9. Vito Peragine, 2004. "Ranking Income Distributions According to Equality of Opportunity," Journal of Economic Inequality, Springer, vol. 2(1), pages 11-30, April.
  10. Aaberge, Rolf & Mogstad, Magne, 2010. "On the Measurement of Long-Term Income Inequality and Income Mobility," IZA Discussion Papers 4699, Institute for the Study of Labor (IZA).
  11. Peragine, Vito & Serlenga, Laura, 2007. "Higher Education and Equality of Opportunity in Italy," IZA Discussion Papers 3163, Institute for the Study of Labor (IZA).
  12. 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.
  13. François Bourguignon & Francisco H. G. Ferreira & Marta Menendez, 2003. "Inequality of outcomes and inequality of opportunities in Brazil," Textos para discussão 478, Department of Economics PUC-Rio (Brazil).
  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. 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.
  16. DONALDSON, David & WEYMARK, John A., . "Ethically flexible Gini indices for income distributions in the continuum," CORE Discussion Papers RP -520, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  17. Fleurbaey, Marc, 2012. "Fairness, Responsibility, and Welfare," OUP Catalogue, Oxford University Press, number 9780199653591, March.
  18. King, Mervyn A., 1983. "Welfare analysis of tax reforms using household data," Journal of Public Economics, Elsevier, vol. 21(2), pages 183-214, July.
  19. Raaum, Oddbjørn & Salvanes, Kjell G. & Sørensen, Erik Ø., 2003. "The Neighbourhood Is Not What It Used to Be," IZA Discussion Papers 952, Institute for the Study of Labor (IZA).
  20. Yaari, Menahem E., 1988. "A controversial proposal concerning inequality measurement," Journal of Economic Theory, Elsevier, vol. 44(2), pages 381-397, April.
  21. William D. Nordhaus, 1972. "The Effects of Inflation on the Distribution of Economic Welfare," Cowles Foundation Discussion Papers 329, Cowles Foundation for Research in Economics, Yale University.
  22. Milton Friedman, 1957. "Introduction to "A Theory of the Consumption Function"," NBER Chapters, in: A Theory of the Consumption Function, pages 1-6 National Bureau of Economic Research, Inc.
  23. 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.
  24. Aaberge, Rolf, 2001. "Axiomatic Characterization of the Gini Coefficient and Lorenz Curve Orderings," Journal of Economic Theory, Elsevier, vol. 101(1), pages 115-132, November.
  25. Rolf Aaberge, 2006. "Gini’s Nuclear Family," Discussion Papers 491, Research Department of Statistics Norway.
  26. Elchanan Ben Porath & Itzhak Gilboa, 1991. "Linear Measures, the Gini Index and the Income-Equality Tradeoff," Discussion Papers 944, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  27. Aaberge, Rolf & Colombino, Ugo & Strøm, Steinar, 2003. "Do More Equal Slices Shrink the Cake? An Empirical Investigation of Tax-Transfer Reform Proposals in Italy," Memorandum 37/2003, Oslo University, Department of Economics.
  28. Lefranc, A. & Pistolesi, Nicolas & Trannoy, Alain, 2005. "Inequality of opportunities vs inequality of outcomes: are western societies all alike?," ISER Working Paper Series 2005-15, Institute for Social and Economic Research.
  29. 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, vol. 81(2), pages S279-88, Part II, .
  30. repec:wdi:papers:2003-630 is not listed on IDEAS
  31. Daniele Checchi & Vito Peragine, 2010. "Inequality of opportunity in Italy," Journal of Economic Inequality, Springer, vol. 8(4), pages 429-450, December.
  32. Peragine, Vitorocco, 2002. "Opportunity egalitarianism and income inequality," Mathematical Social Sciences, Elsevier, vol. 44(1), pages 45-64, September.
  33. repec:cup:cbooks:9780521296762 is not listed on IDEAS
  34. Donaldson, David & Weymark, John A., 1980. "A single-parameter generalization of the Gini indices of inequality," Journal of Economic Theory, Elsevier, vol. 22(1), pages 67-86, February.
  35. Roemer, J.E., 1992. "A Pragmatic Theory of Responsibility for the Egalitarian Planner," Papers 391, California Davis - Institute of Governmental Affairs.
  36. Solon, Gary, 1999. "Intergenerational mobility in the labor market," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 29, pages 1761-1800 Elsevier.
  37. Ebert, Udo, 1987. "Size and distribution of incomes as determinants of social welfare," Journal of Economic Theory, Elsevier, vol. 41(1), pages 23-33, February.
  38. Kydland, Finn E & Prescott, Edward C, 1982. "Time to Build and Aggregate Fluctuations," Econometrica, Econometric Society, vol. 50(6), pages 1345-70, November.
  39. Vitorocco Peragine, . "Measuring and Implementing Equality of Opportunity for Income," Discussion Papers 98/11, Department of Economics, University of York.
  40. 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.
  41. Mehran, Farhad, 1976. "Linear Measures of Income Inequality," Econometrica, Econometric Society, vol. 44(4), pages 805-09, July.
  42. Rolf Aaberge, 2000. "Characterizations of Lorenz curves and income distributions," Social Choice and Welfare, Springer, vol. 17(4), pages 639-653.
  43. Atkinson, Anthony B., 1970. "On the measurement of inequality," Journal of Economic Theory, Elsevier, vol. 2(3), pages 244-263, September.
  44. 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, vol. 24(4), pages 879-900, October.
  45. Shorrocks, Anthony, 1978. "Income inequality and income mobility," Journal of Economic Theory, Elsevier, vol. 19(2), pages 376-393, December.
  46. Fleurbaey Marc, 1995. "Three Solutions for the Compensation Problem," Journal of Economic Theory, Elsevier, vol. 65(2), pages 505-521, April.
Full references (including those not matched with items on IDEAS)

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

When requesting a correction, please mention this item's handle: RePEc:eee:pubeco:v:95:y:2011:i:3:p:193-204. 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: (Zhang, Lei)

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.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.