Research

Working Papers

Measuring Unfair Inequality: Reconciling Equality of Opportunity and Freedom from Poverty

(joint with Ravi Kanbur and Andreas Peichl)

Revision requested by Review of Economic Studies. Download latest version here.

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.

The Roots of Inequality: Estimating Inequality of Opportunity from Regression Trees

(joint with Paolo Brunori and Daniel Gerszon Mahler)

Submitted. Download latest version here.

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.

Lower and Upper Bounds of Inequality of Opportunity in Emerging Economies

(joint with Andreas Peichl and Daniel Weishaar)

Submitted. Download latest version here.

Equality of opportunity is an important normative ideal that concerns politicians and the larger public alike. In spite of its wide acceptance, current estimation approaches in the literature suffer from severe data restrictions that lead to biased estimates of inequality of opportunity. These shortcomings are particularly pronounced for emerging economies in which comprehensive household survey data often is unavailable. In this paper, we address these issues by estimating lower and upper bounds of inequality of opportunity for a set of emerging economies. Thereby, we address recent critiques that worry about the prevalence of lower bound estimates and the ensuing scope for downplaying the normative significance of inequality.

Publications

Beyond Equal Rights: Equality of Opportunity in Political Participation

(joint with Andreas Peichl)

Forthcoming in Review of Income and Wealth. Download latest version here.

While it is well documented that political participation is stratified by socio-economic characteristics, it is an open question how this finding bears on the evaluation of the democratic process with respect to its fairness. In this paper we draw on the analytical tools developed in the equality of opportunity literature to answer this question. We investigate to what extent differential political participation is determined by factors that lie beyond individual control (circumstances) rather than being the result of individual effort. Using rich panel data from the US, we indeed find a lack of political opportunity for the most disadvantaged circumstance types. Opportunity shortages tend to complement each other across different forms of participation and persist over time. Family characteristics and psychological conditions during childhood emanate as the strongest determinants of political opportunities.

Inequality of Income Acquisition: The Role of Childhood Circumstances

(joint with Andreas Peichl, John E. Roemer and Martin Ungerer)

Social Choice and Welfare, 2017, 49 (3-4), pp. 499-544. Download latest version here.

Many studies have estimated the effect of circumstances on income acquisition. Perhaps surprisingly, the fraction of inequality attributable to circumstances is usually quite small—in the advanced democracies, approximately 20%. One reason for this is the lack of data on circumstance variables in empirical research. Here, we argue that all behaviors and accomplishments of children should be considered the consequence of circumstances: that is, an individual should not be considered to be responsible for her choices before an age of consent is reached. Using two data sets that contain data on childhood accomplishments, other environmental circumstances and the income as an adult, we calculate that the fraction of income inequality due to circumstances in the US rises from 27 to 43% when accounting for childhood circumstances. In the UK it rises from 18 to 27%.

Work in Progress

  • The Influence of Paternal Time Investments on Human Capital Formation.
  • Genetic Ability and the Mediating Influence of Educational Institutions (joint with Benjamin Arold and Marc Stöckli).

Other Publications

  • Ökonomische Ungleichheit in Deutschland – ein Überblick (joint with Andreas Peichl and Marc Stöckli). Perspektiven der Wirtschaftspolitik, 2018, 19 (3), pp. 185-200. Download latest version here.
  • Intergenerationelle Einkommensmobilität: Schlusslicht Deutschland? (joint with Andreas Peichl und Daniel Weishaar), ifo Schnelldienst 71 (20), 2018, pp. 20–28. Download latest version here.
  • Inequality and Unfairness in Europe (joint with Andreas Peichl), CESifo Forum 19 (2), 2018, pp. 26–34. Download latest version here.
  • Wurzeln der Ungleichheit – Ist Ungleichheit gleich ungerecht? (joint with Paolo Brunori and Daniel Gerszon Mahler), ifo Schnelldienst 71 (05), 2018, pp. 18–22. Download latest version here.
  • The Local Impacts of Large-Scale Land Acquisitions: A Review of Case Study Evidence from Sub-Saharan Africa (joint with Daniel F. Heuermann). Journal of Contemporary African Studies, 2017, 35 (2), pp. 168-189. Download latest version here.