Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/222129
Authors: 
Hufe, Paul
Kanbur, Ravi
Peichl, Andreas
Year of Publication: 
2020
Series/Report no.: 
Discussion Paper 232
Abstract: 
Empirical evidence on distributional preferences shows that people do not judge inequality as problematic per se but that they take the underlying sources of income differences into account. In contrast to this evidence, current measures of inequality do not adequately reflect these normative preferences. In this paper we address this shortcoming by developing a new measure of unfair inequality that reconciles two widely-held fairness principles: equality of opportunity and freedom from poverty. We provide two empirical applications of our measure. First, we analyze the development of inequality in the US from 1969 to 2014 from a normative perspective. Second, we conduct a corresponding international comparison between the US and 31 European countries in 2010. Our results document increasing unfairness in the US over time. This trend is driven by a strong decrease in social mobility that puts the "land of opportunity" among the most unfair countries in 2010.
Subjects: 
Inequality
Equality of Opportunity
Poverty
Fairness
Measurement
JEL: 
D31
D63
I32
Document Type: 
Working Paper

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