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Measuring long-term inequality of opportunity

Rolf Aaberge (), Magne Mogstad () and Vito Peragine ()

No 158, Working Papers from ECINEQ, Society for the Study of Economic Inequality

Abstract: In this paper, we introduce and apply a general framework for evaluating long-term income distributions according to the Equality of Opportunity principle. Our framework allows for both an exante and an ex-post approach to EOp. Our ex-post approach relies on a permanent income measure defined as the minimum annual expenditure an individual would need in order to be as well off as he could be by undertaking inter-period income transfers. 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 the expected permanent income for individuals with identical circumstances. Hence, the ex-ante approach pays attention to inequalities in expected permanent income between different types of individuals. 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 lifespan.

Keywords: equality of opportunity; social welfare; inequality; permanent income; intertemporal choice; ex-ante; ex-post. (search for similar items in EconPapers)
JEL-codes: D71 D91 I32 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-mic
Date: 2010
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http://www.ecineq.org/milano/WP/ECINEQ2010-158.pdf (application/pdf)

Related works:
Journal Article: Measuring long-term inequality of opportunity (2011) Downloads
Journal Article: Measuring long-term inequality of opportunity (2011) Downloads
Working Paper: Measuring Long-Term Inequality of Opportunity (2010) Downloads
Working Paper: Measuring long-term inequality of opportunity (2010) Downloads
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