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Inequality of Opportunity and Income Redistribution

Author

Listed:
  • Preuss, Marcel

    (Cornell University)

  • Reyes, Germán

    (Middlebury College)

  • Somerville, Jason

    (Federal Reserve Bank of New York)

  • Wu, Joy

    (University of British Columbia)

Abstract

Support for redistribution depends on whether inequality stems from differences in performance or luck, but different sources of luck may impact redistribution differentially. We elicit redistribution decisions from a U.S.-representative sample who observe worker earnings and whether luck influenced their earnings directly ("lucky outcomes") or indirectly by providing a relative advantage ("lucky opportunities"). Participants redistribute less under lucky opportunities. When assessing the impact of unequal opportunities, individuals rely on a heuristic that leads them to underestimate how even a small relative advantage can substantially influence worker earnings. Our findings highlight the role of inferential challenges in shaping attitudes towards inequality.

Suggested Citation

  • Preuss, Marcel & Reyes, Germán & Somerville, Jason & Wu, Joy, 2024. "Inequality of Opportunity and Income Redistribution," IZA Discussion Papers 17155, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp17155
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    More about this item

    Keywords

    unequal opportunities; inequality; redistribution; luck;
    All these keywords.

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement

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