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Title:Measuring long-term inequality of opportunity PDF Logo
Authors:Aaberge, Rolf
Mogstad, Magne
Peragine, Vito
Issue Date:2010
Series/Report no.:IZA Discussion Papers 4714
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 ex-ante 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.
Subjects:Equality of opportunity
social welfare
inequality
permanent income
intertemporal choice
ex-ante
ex-post
JEL:D71
D91
I32
Document Type:Working Paper
Appears in Collections:IZA Discussion Papers, Forschungsinstitut zur Zukunft der Arbeit (IZA)

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