IDEAS home Printed from https://ideas.repec.org/a/eee/pubeco/v95y2011i7-8p488-499.html
   My bibliography  Save this article

Measuring unfair (in)equality

Author

Listed:
  • Almås, Ingvild
  • Cappelen, Alexander W.
  • Lind, Jo Thori
  • Sørensen, Erik Ø.
  • Tungodden, Bertil

Abstract

This paper shows one way of generalizing the standard framework of inequality measurement to allow for a distinction between fair and unfair inequalities. We introduce the unfairness Lorenz curve and the unfairness Gini, which are generalizations of the standard versions of the Lorenz curve and the Gini. With this more general framework in place, we study the implications of responsibility-sensitive theories of justice for the evaluation of the income distribution in Norway from 1986 to 2005. We find that both the pre-tax and the post-tax income distributions have become less fair in Norway, even though the standard Gini for the pre-tax income distribution has decreased in the same period. Two trends explain this development: the increase in income share of the top percentile and the change in the situation of females in the labor market. The concentration of income at the top of the distribution contributes both to increased unfairness and increased inequality, whereas the increase in females' working hours and level of education primarily contributes to a reduction in inequality. Thus, the latter effect dominates for the standard Gini and the former effect for the unfairness Gini. Furthermore, we find that the increase in post-tax unfairness is even larger than the increase in pre-tax unfairness, which shows that the tax system in Norway contributes less to eliminating unfairness in 2005 than in 1986.

Suggested Citation

  • Almås, Ingvild & Cappelen, Alexander W. & Lind, Jo Thori & Sørensen, Erik Ø. & Tungodden, Bertil, 2011. "Measuring unfair (in)equality," Journal of Public Economics, Elsevier, vol. 95(7-8), pages 488-499, August.
  • Handle: RePEc:eee:pubeco:v:95:y:2011:i:7-8:p:488-499
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0047-2727(10)00162-3
    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 below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Bossert W., 1996. "Redistribution mechanisms based on individual characteristics," Mathematical Social Sciences, Elsevier, vol. 31(1), pages 51-51, February.
    2. Sandra E. Black & Paul J. Devereux & Kjell G. Salvanes, 2010. "Small Family, Smart Family? Family Size and the IQ Scores of Young Men," Journal of Human Resources, University of Wisconsin Press, vol. 45(1).
    3. Anthony B. Atkinson & Thomas Piketty & Emmanuel Saez, 2011. "Top Incomes in the Long Run of History," Journal of Economic Literature, American Economic Association, vol. 49(1), pages 3-71, March.
    4. Belzil, Christian, 2007. "The return to schooling in structural dynamic models: a survey," European Economic Review, Elsevier, vol. 51(5), pages 1059-1105, July.
    5. repec:dau:papers:123456789/1552 is not listed on IDEAS
    6. Alexander W. Cappelen & Astri Drange Hole & Erik Ø Sørensen & Bertil Tungodden, 2007. "The Pluralism of Fairness Ideals: An Experimental Approach," American Economic Review, American Economic Association, vol. 97(3), pages 818-827, June.
    7. 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.
    8. Paglin, Morton, 1975. "The Measurement and Trend of Inequality: A Basic Revision," American Economic Review, American Economic Association, vol. 65(4), pages 598-609, September.
    9. François Bourguignon & Francisco H. G. Ferreira & Marta Menéndez, 2007. "Inequality Of Opportunity In Brazil," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 53(4), pages 585-618, December.
    10. Fleurbaey, Marc, 2012. "Fairness, Responsibility, and Welfare," OUP Catalogue, Oxford University Press, number 9780199653591.
    11. Torbjørn Haegeland & Tor Jakob Klette & Kjell G. Salvanes, 1999. "Declining Returns to Education in Norway? Comparing Estimates across Cohorts, Sectors and over Time," Scandinavian Journal of Economics, Wiley Blackwell, vol. 101(4), pages 555-576, December.
    12. Erik Schokkaert & Kurt Devooght, 2003. "Responsibility-sensitive fair compensation in different cultures," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 21(2), pages 207-242, October.
    13. Marc Fleurbaey & Walter Bossert, 1996. "Redistribution and compensation (*)," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 13(3), pages 343-355.
    14. James Konow, 2000. "Fair Shares: Accountability and Cognitive Dissonance in Allocation Decisions," American Economic Review, American Economic Association, vol. 90(4), pages 1072-1091, September.
    15. Wulf Gaertner & Lars Schwettmann, 2007. "Equity, Responsibility and the Cultural Dimension," Economica, London School of Economics and Political Science, vol. 74(296), pages 627-649, November.
    16. Marc Fleurbaey & François Maniquet, 2006. "Fair Income Tax," Review of Economic Studies, Oxford University Press, vol. 73(1), pages 55-83.
    17. Norman Frohlich & Joe Oppenheimer & Anja Kurki, 2004. "Modeling Other-Regarding Preferences and an Experimental Test," Public Choice, Springer, vol. 119(1_2), pages 91-117, April.
    18. Haegeland, Torbjorn & Klette, Tor Jakob & Salvanes, Kjell G, 1999. " Declining Returns to Education in Norway? Comparing Estimates across Cohorts, Sectors and Over Time," Scandinavian Journal of Economics, Wiley Blackwell, vol. 101(4), pages 555-576, December.
    19. Alexander W. Cappelen & Bertil Tungodden, 2006. "Relocating the responsibility cut: should more responsibility imply less redistribution?," Politics, Philosophy & Economics, , vol. 5(3), pages 353-362, October.
    20. Fleurbaey, Marc, 1995. "Equality and responsibility," European Economic Review, Elsevier, vol. 39(3-4), pages 683-689, April.
    21. Kurt Devooght, 2008. "To Each the Same and to Each his Own: A Proposal to Measure Responsibility‐Sensitive Income Inequality," Economica, London School of Economics and Political Science, vol. 75(298), pages 280-295, May.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. X. Ramos & D. Van De Gaer, 2012. "Empirical Approaches to Inequality of Opportunity: Principles, Measures, and Evidence," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 12/792, Ghent University, Faculty of Economics and Business Administration.
    2. Xavier Ramos & Dirk Van de gaer, 2012. "Empirical approaches to inequality of opportunity: Principles, measures, and evidence," Working Papers 259, ECINEQ, Society for the Study of Economic Inequality.
    3. John E. Roemer & Alain Trannoy, 2013. "Equality of Opportunity," Cowles Foundation Discussion Papers 1921, Cowles Foundation for Research in Economics, Yale University.
    4. Alexander W. Cappelen & Bertil Tungodden, 2017. "Fairness and the proportionality principle," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 49(3), pages 709-719, December.
    5. Gill, David & Stone, Rebecca, 2015. "Desert and inequity aversion in teams," Journal of Public Economics, Elsevier, vol. 123(C), pages 42-54.
    6. Dirk Van de gaer & Xavier Ramos, 2020. "Measurement of inequality of opportunity based on counterfactuals," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 55(3), pages 595-627, October.
    7. Alexander Cappelen & Bertil Tungodden, 2009. "Rewarding effort," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 39(3), pages 425-441, June.
      • Cappelen, Alexander W. & Tungodden, Bertil, 2004. "Rewarding effort," Memorandum 15/2004, Oslo University, Department of Economics.
    8. Jacquet, Laurence & Van de Gaer, Dirk, 2011. "A comparison of optimal tax policies when compensation or responsibility matter," Journal of Public Economics, Elsevier, vol. 95(11), pages 1248-1262.
    9. repec:noj:journl:v:38:y:2013:p:3 is not listed on IDEAS
    10. Erling Barth & Alexander W. Cappelen & Tone Ognedal, 2013. "Fair Tax Evasion," Nordic Journal of Political Economy, Nordic Journal of Political Economy, vol. 38, pages 1-3.
    11. Cappelen, Alexander W. & Tungodden, Bertil, 2012. "Tax policy and fair inequality," Discussion Paper Series in Economics 3/2012, Norwegian School of Economics, Department of Economics.
    12. Almås, Ingvild & Cappelen, Alexander W. & Sørensen, Erik Ø. & Tungodden, Bertil, 2015. "Fairness and the Development of Inequality Acceptance," Discussion Paper Series in Economics 18/2015, Norwegian School of Economics, Department of Economics.
    13. Mollerstrom, Johanna & Reme, Bjørn-Atle & Sørensen, Erik Ø., 2015. "Luck, choice and responsibility — An experimental study of fairness views," Journal of Public Economics, Elsevier, vol. 131(C), pages 33-40.
    14. Erik Figueiredo & José Silva Netto Junior, 2014. "More equal but not so fair: an analysis of Brazilian income distribution from 1995 to 2009," Empirical Economics, Springer, vol. 46(4), pages 1325-1337, June.
    15. Ana Suárez Álvarez & Ana Jesús López Menéndez, 2016. "Inequality of opportunity and income inequality in Spain: An analysis over time," Working Papers 423, ECINEQ, Society for the Study of Economic Inequality.
    16. Kristof Bosmans & Z. Emel Öztürk, 2021. "Measurement of inequality of opportunity: A normative approach," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 19(2), pages 213-237, June.
    17. Ismael Rodriguez-Lara & Luis Moreno-Garrido, 2012. "Modeling Inequity Aversion in a Dictator Game with Production," Games, MDPI, Open Access Journal, vol. 3(4), pages 1-12, October.
    18. Sophie Harnay & Elisabeth Tovar, 2017. "Obeying vs. resisting unfair laws. A structural analysis of the internalization of collective preferences on redistribution using classification trees and random forests," EconomiX Working Papers 2017-34, University of Paris Nanterre, EconomiX.
    19. Bjorn Bartling & Alexander Cappelen & Mathias Ekström & Erik Ø. Sørensen & Bertil Tungodden, 2018. "Fairness in Winner-Take-All Markets," Working Papers 2018-031, Human Capital and Economic Opportunity Working Group.
    20. Magali Jaoul-Grammare & Brice Magdalou, 2013. "Opportunities in Higher Education: An Application to France," Annals of Economics and Statistics, GENES, issue 111-112, pages 295-325.
    21. Schokkaert, Erik & Van de gaer, Dirk & Vandenbroucke, Frank & Luttens, Roland Iwan, 2004. "Responsibility sensitive egalitarianism and optimal linear income taxation," Mathematical Social Sciences, Elsevier, vol. 48(2), pages 151-182, September.

    More about this item

    Keywords

    Income inequality Fairness;

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:pubeco:v:95:y:2011:i:7-8:p:488-499. 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: . General contact details of provider: http://www.elsevier.com/locate/inca/505578 .

    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 CitEc recognized a bibliographic reference but did not link an item in RePEc 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 RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/inca/505578 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.