ECONOMIC POLICY AND EQUALITY OF OPPORTUNITY

We employ equality of opportunity (EOP) definitions from the literature on distributive justice to a quantitative model featuring intergenerational human capital investments and luck. When calibrated to the US, the model-implied degree of EOP differs substantially depending on whether one considers...

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Bibliographic Details
Published in:The Economic journal (London) 2018-07, Vol.128 (612), p.F114-F151
Main Authors: Lee, Sang Yoon (Tim), Seshadri, Ananth
Format: Article
Language:English
Subjects:
Capital investments
Chance
Distributive justice
Economic models
Economic policy
Economic theory
Equal opportunities
Equality
FEATURE: NORMATIVE ETHICS AND WELFARE
Human capital
Inequality
Redistribution
Subsidies
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Summary:We employ equality of opportunity (EOP) definitions from the literature on distributive justice to a quantitative model featuring intergenerational human capital investments and luck. When calibrated to the US, the model-implied degree of EOP differs substantially depending on whether one considers it ethical to reward offspring for the effort of previous generations. Despite reducing intragenerational inequality, education subsidies do little to promote EOP. This is because if one thinks intergenerational investments should be rewarded, there is little room for improvement to begin with; in the opposite case, much stronger redistribution is needed for the policies to have a quantitative impact.
ISSN:0013-0133
1468-0297
DOI:10.1111/ecoj.12480