Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/185061
Authors: 
Hufe, Paul
Kanbur, Ravi
Peichl, Andreas
Year of Publication: 
2018
Series/Report no.: 
IZA Discussion Papers 11601
Abstract: 
Rising income inequalities are widely debated in public and academic discourse. In this paper, we contribute to this debate by proposing a new family of measures of unfair inequality. To do so, we acknowledge that inequality is not bad per se, but that its underlying sources need to be taken into account. Thereby, this paper is the first to reconcile two prominent fairness principles, namely equality of opportunity and freedom from poverty, into a joint measure of unfair inequality. Two empirical applications provide important new insights on the development of unfair inequality both over time (in the US) and across countries (in Europe). First, unfair inequality shows different time trends and country rankings compared to total inequality. Second, average unfair inequality doubles when complementing the ideal of an equal opportunity society with poverty aversion. Furthermore, we show that an exclusive focus on top incomes may misguide fairness judgments.
Subjects: 
inequality
equality of opportunity
poverty
fairness
measurement
JEL: 
D31
D63
I32
Document Type: 
Working Paper
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