This paper analyzes the relationship between income inequality and inequality of opportunities for income acquisition in nine developed countries during the 1990s. Equality of opportunity is defined ...as the situation where income distributions conditional on social origin cannot be ranked according to stochastic dominance criteria. We measure social origin by parental education and occupation and use the database built by Roemer et al. (2003). Stochastic dominance is assessed using nonparametric statistical tests. Our results indicate strong disparities in the degree of equality of opportunity across countries and a strong correlation between inequality of outcomes and inequality of opportunity. The U.S. and Italy show up as the most unequal countries in terms of both outcome and opportunity. At the opposite extreme, income distributions conditional on social origin are almost the same in Scandinavian countries even before any redistributive policy. We complement the ordinal comparison by resorting to an original scalar “Gini” index of opportunities, which can be decomposed into a risk and a return component. In our sample, inequality of opportunity is mostly driven by differences in mean income conditional on social origin, and differences in risk compensate the return element in most countries.
This paper estimates the extent of intergenerational income mobility in Japan among sons and daughters born between 1935 and 1975. Our estimates rely on a two-sample instrumental variables approach ...using representative data from the Japanese Social Stratification and Mobility surveys, collected between 1965 and 2005. Father's income is predicted on the basis of a rich set of variables, and we discuss changes in the Japanese earnings structure for cohorts born between the early 1900s and the 1960s. Our main results indicate that the intergenerational income elasticity (IGE) for both sons and daughters in Japan lies around 0.35, which is an intermediate value, by international standards. We discuss the sensitivity of the IGE to using either personal or family income as the income variable for both fathers and children. We also examine changes across cohorts in the IGE. Results indicate that intergenerational mobility has been roughly stable over the last decades.
This paper analyses long-term trends in intergenerational earnings persistence in France for male cohorts born between 1931 and 1975. This time period has witnessed important changes in the French ...labour market and educational system, in particular an important compression of earnings differentials as well as a large expansion in access to secondary and higher education. Using a two-sample instrumental variables approach, I estimate two measures of intergenerational economic persistence: the intergenerational earnings elasticity (IGE) and the intergenerational correlation (IGC). Over the period, the IGE exhibits a V-shaped pattern. It falls from a high of value of 0.6 for cohorts born in the 1930s to around 0.4 for those born in the 1950s, but subsequently rises to a level close to that at the beginning of the period. In contrast, the IGC remains relatively stable over the period. This suggests that changes in the IGE are partly driven by transitory responses to changes in cross-sectional inequality rather than long-term changes in the degree of intergenerational persistence.
This paper analyzes long-term trends in intergenerational earnings persistence in France for male cohorts born between 1931 and 1975. This time period has witnessed important changes in the French ...labor market and educational system, in particular an important compression of earnings differentials as well as a large expansion in access to secondary and higher education. Using a two-sample instrumental variables approach, I estimate two measures of intergenerational economic persistence: the in-tergenerational earnings elasticity (IGE) and the intergenerational correlation (IGC). Over the period, the IGE exhibits a V-shaped pattern. It falls from a high of value of .6 for cohorts born in the 1930s to around .4 for those born in the 1950s, but subsequently rises to a level close to the beginning of the period. In contrast, the IGC remains relatively stable over the period. This suggests that changes in the IGE are partly driven by transitory responses to changes in cross-sectional inequality rather than long-term changes in the degree of intergenerational persistence.
Abstract
We analyze the trade-off between child quantity and child quality in developing countries by estimating the effect of family size on child’s education in urban Philippines. To isolate ...exogenous changes in family size, we exploit a policy shock: in the late 1990s, the mayor of Manila enacted a municipal ban on modern contraceptives. Since other comparable cities in the Manila metropolitan area were not affected by the ban, this allows us to implement a difference-in-difference estimation of the effect on family size. We also exploit the fact that older mothers were less likely to become pregnant during the ban. Our results indicate that the contraceptive ban led to a significant increase in family size. They also provide evidence of a quality-quantity trade-off: increased family size led to a sizable decrease in educational attainment.
Equality of opportunity is usually defined as a situation where the effect of circumstances on outcome is nullified (compensation principle) and effort is rewarded (reward principle). We propose a ...new version of the reward principle based on the idea that effort deserves reward for it is costly. We show that luck can be introduced in two ways in the definition of these principles, depending on whether the correlation between luck and circumstances should be nullified and whether the correlation between luck and effort should be rewarded. In this regard, the timing of luck with respect to effort decisions is crucial, as is exemplified by moral hazard where effort choice influences the lottery of future uncertain events.
This paper develops a criterion to assess equalization of opportunity that is consistent with theoretical views of equality of opportunity. We characterize inequality of opportunity as a situation ...where some groups in society enjoy an illegitimate advantage. In this context, equalization of opportunity requires that the extent of the illegitimate advantage enjoyed by the privileged groups falls. Robustness requires that this judgment be supported by the broadest class of individual preferences. We formalize this criterion in a decision-theoretic framework and derive an empirical condition for equalization of opportunity based on observed opportunity distributions. The criterion is used to assess the effectiveness of child care at equalizing opportunity among children, using quantile treatment effects estimates of a major child care reform in Norway. Overall, we find strong evidence supporting equalization of opportunity.
This paper analyzes assortative mating and its contribution to inequality in France. We first provide descriptive evidence on the statistical association in several socio‐economic attributes of ...partners. Second, we assess the contribution of assortative mating to earnings inequality between couples. We provide a new method for assessing the contribution of assortative mating to inequality in couple’s potential earnings, that accounts for selection bias arising from labor force participation. Our results indicate a strong degree of assortative mating in France. The correlation in earnings is around 0.17 for annual earnings, around 0.35 for full‐time equivalent earnings and up to 0.49 when using multi‐year average earnings. Assortative mating tends to increase inequality among couples. For annual earnings, the effect accounts for 3 to 9 percent of measured inequality. The effect of assortative mating on household potential earnings is much larger and amounts to 10 to 20 percent for observed inequality.
We offer a model of equality of opportunity that encompasses different conceptions expressed in the public and philosophical debates. In addition to
circumstances whose effect on outcome should be ...compensated and
effort which represents a legitimate source of inequality, we introduce a third factor,
luck, that captures the random factors whose impact on outcome should be
even-handed for equality of opportunity to be satisfied. Then, we analyze how the various definitions of equality of opportunity can be empirically identified, given data limitations and provide testable conditions. Definitions and conditions resort to standard stochastic dominance tools. Lastly, we develop an empirical analysis of equality of opportunity for income acquisition in France over the period 1979–2000 which reveals that the degree of inequality of opportunity tends to decrease and that the degree of risk of income distributions, conditional on social origin, appears very similar across all groups of social origins.
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