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Opportunities, Preferences and Incomes

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  • Nilsson, William

    () (Department of Economics, Umeå University)

Abstract

The distinction between circumstances that constrain an individual’s opportunities and the individual choices also affecting a particular outcome is the main idea of theories of equality of opportunity. In this study, equality of opportunity is analyzed for Swedish data using a large set of variables indicating different circumstances likely to affect an individual’s opportunities. A semiparametric model is estimated to allow for a possible nonlinear relation between parental income and the income of the adult child. The reason is a hypothesis that a constrained investment behavior would make the relationship nonlinear. The results indicate significant inequality of opportunities. However, they do not indicate a nonlinear relationship between parental income and the income of the adult child. Thus, the hypothesis that low income families will have a constrained investment behavior in human capital formation is brought into question as the explanation of intergenerational income correlation in Sweden.

Suggested Citation

  • Nilsson, William, 2005. "Opportunities, Preferences and Incomes," Umeå Economic Studies 649, Umeå University, Department of Economics.
    • Handle: RePEc:hhs:umnees:0649
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    References listed on IDEAS

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    1. Ramses H. ABUL NAGA, 1998. "Estimating the Intergenerational Correlation of Incomes : An Errors in Variables Framework," Cahiers de Recherches Economiques du Département d'économie 9812, Université de Lausanne, Faculté des HEC, Département d’économie.
    2. Robinson, Peter M, 1988. "Root- N-Consistent Semiparametric Regression," Econometrica, Econometric Society, vol. 56(4), pages 931-954, July.
    3. Miles Corak & Andrew Heisz, 1998. "The Intergenerational Earnings and Income Mobility of Canadian," Labor and Demography 9808001, University Library of Munich, Germany.
    4. 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.
    5. Gary S. Becker & Nigel Tomes, 1994. "Human Capital and the Rise and Fall of Families," NBER Chapters,in: Human Capital: A Theoretical and Empirical Analysis with Special Reference to Education (3rd Edition), pages 257-298 National Bureau of Economic Research, Inc.
    6. Anders Björklund & Markus Jäntti, 2000. "Intergenerational mobility of socio-economic status in comparative perspective," Nordic Journal of Political Economy, Nordic Journal of Political Economy, vol. 26, pages 3-32.
    7. Bjorklund, Anders & Chadwick, Laura, 2003. "Intergenerational income mobility in permanent and separated families," Economics Letters, Elsevier, vol. 80(2), pages 239-246, August.
    8. Zimmerman, David J, 1992. "Regression toward Mediocrity in Economic Stature," American Economic Review, American Economic Association, vol. 82(3), pages 409-429, June.
    9. Bjorklund, Anders & Jantti, Markus, 1997. "Intergenerational Income Mobility in Sweden Compared to the United States," American Economic Review, American Economic Association, vol. 87(5), pages 1009-1018, December.
    10. Donna Ginther & Robert Haveman & Barbara Wolfe, 2000. "Neighborhood Attributes as Determinants of Children's Outcomes: How Robust Are the Relationships?," Journal of Human Resources, University of Wisconsin Press, vol. 35(4), pages 603-642.
    11. John E. Roemer, 2002. "Equality of opportunity: A progress report," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 19(2), pages 455-471.
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    Cited by:

    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. Vito Peragine & Flaviana Palmisano & Paolo Brunori, 2014. "Economic Growth and Equality of Opportunity," World Bank Economic Review, World Bank Group, vol. 28(2), pages 247-281.

    More about this item

    Keywords

    equality of opportunity; intergenerational income mobility; preferences; tastes; semiparametric estimation;

    JEL classification:

    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • J62 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Job, Occupational and Intergenerational Mobility; Promotion

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