Measuring opportunity inequality with monetary transfers
In this paper I consider the problem of measuring opportunity inequality when monetary transfers are possible. First, I consider the case in which agents have homogeneous preferences, as in the previous literature, and I then propose an extension to the heterogeneous case. In both, I identify an appropriate egalitarian benchmark relative to which inequality can be measured, and I establish that this yields a theory of measurement analogous to that of income inequality. This overcomes a difficulty recently reported Ok (1997). Finally, I discuss the benchmark notion of equal shadow wealth as a new concept of fairness. The results of the paper are immediately applicable to the measurement of multidimensional economic inequality including economies with indivisible goods.
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Volume (Year): 7 (2009)
Issue (Month): 4 (December)
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