Dynamic Fairness: Mobility, Inequality, and the Distribution of Prospects

Baochun Peng and Haidong Yuan

Scandinavian Journal of Economics, 2021, vol. 123, issue 4, 1314-1338

Abstract: A society is fairer when the income of the family into which individuals are born, over which they have no control, plays a smaller role in determining their prospects. We examine the nature of dynamic fairness based on the distribution of prospects using a generalized concentration curve. We find that dynamic fairness is jointly determined by inequality and exchange mobility, with inequality reducing fairness and exchange mobility enhancing it. Moreover, any degree of dynamic fairness can be obtained from one of the many pairs of inequality and exchange mobility. Our results can help compare different economic environments through the distribution of their economic opportunities.

Date: 2021
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https://doi.org/10.1111/sjoe.12438

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