Lower and Upper Bounds of Unfair Inequality: Theory and Evidence for Germany and the US

Judith Niehues () and Andreas Peichl
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Judith Niehues: Cologne Institute for Economic Research

No 5834, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: Previous estimates of unfair inequality of opportunity (IOp) are only lower bounds because of the unobservability of the full set of endowed circumstances beyond the sphere of individual responsibility. In this paper, we suggest a new estimator based on a fixed effects panel model which additionally allows identifying an upper bound. We illustrate our approach by comparing Germany and the US based on harmonized micro data. We find significant and robust differences between lower and upper bound estimates – both for gross and net earnings based either on periodical or permanent income – for both countries. We discuss the cross-country differences and similarities in IOp in the light of di¤erences in social mobility and persistence.

Keywords: redistribution; fairness; equality of opportunity; wage inequality (search for similar items in EconPapers)
JEL-codes: D31 D63 H24 J62 (search for similar items in EconPapers)
Pages: 39 pages
Date: 2011-07
New Economics Papers: this item is included in nep-lab
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Citations: View citations in EconPapers (5)

Published - revised version published in: Social Choice and Welfare, 2014, 43 (1), 73-99

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Related works:
Working Paper: Lower and Upper Bounds of Unfair Inequality: Theory and Evidence for Germany and the US (2011)
Working Paper: Lower and upper bounds of unfair inequality: Theory and evidence for Germany and the US (2011)
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