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Opportunity and Inequality across Generations

Winfried Koeniger and Carlo Zanella ()
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Carlo Zanella: University of Zurich

No 15073, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: We analyze how intergenerational mobility and inequality would change relative to the status quo if dynasties had access to optimal insurance against low ability of future generations. Based on a dynamic, dynastic Mirrleesian model, we find that insurance against intergenerational ability risk increases in the social optimum relative to the status quo. This implies less intergenerational mobility in terms of welfare but no quantitatively significant change in earnings mobility. Earnings mobility is thus similar across economies with different incentives and welfare, illustrating that changes in earnings mobility cannot be interpreted readily in welfare terms without further analysis.

Keywords: inequality; intergenerational mobility; asymmetric information; human capital; schooling; bequests (search for similar items in EconPapers)
JEL-codes: E24 H21 I24 J24 J62 (search for similar items in EconPapers)
Pages: 82 pages
Date: 2022-02
New Economics Papers: this item is included in nep-dge, nep-ias, nep-lma, nep-ltv and nep-mac
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Published - revised version published in: Journal of Public Economics, 2022, 208, 104623

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Related works:
Journal Article: Opportunity and inequality across generations (2022) Downloads
Working Paper: Opportunity and Inequality across Generations (2020) Downloads
Working Paper: Opportunity and Inequality across Generations (2020) Downloads
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