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Does high income inequality signify inequality of opportunities?

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  • Navon, David
  • Cohen, Yoav

Abstract

It is often presumed that Gini coefficient values taken to reflect high income inequality are largely due to some combination of socioeconomic factors that gives rise to inequality of opportunities. We demonstrate, using computer simulations, that practically every Gini value within the entire range observed in state economies can be approximated by at least one of a set of possible models of an economy in which earning is totally due to random factors. Although that clearly does not prove that opportunities are in reality fairly equal, it does suggest that inequality of opportunities is not necessary for high income inequality. At the least, it relegates the burden of proof to whoever ascribes the latter largely to the former.

Suggested Citation

  • Navon, David & Cohen, Yoav, 2013. "Does high income inequality signify inequality of opportunities?," MPRA Paper 51408, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:51408
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    References listed on IDEAS

    as
    1. Tomes, Nigel, 1981. "The Family, Inheritance, and the Intergenerational Transmission of Inequality," Journal of Political Economy, University of Chicago Press, vol. 89(5), pages 928-958, October.
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    3. Thomas Piketty & Emmanuel Saez, 2006. "The Evolution of Top Incomes: A Historical and International Perspective," American Economic Review, American Economic Association, vol. 96(2), pages 200-205, May.
    4. Joshua M. Epstein & Robert L. Axtell, 1996. "Growing Artificial Societies: Social Science from the Bottom Up," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262550253, April.
    5. Sen, Amartya, 1973. "On Economic Inequality," OUP Catalogue, Oxford University Press, number 9780198281931.
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    More about this item

    Keywords

    Gini; Lorenz; income inequality; inequality of opportunities;
    All these keywords.

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • I3 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty
    • P1 - Political Economy and Comparative Economic Systems - - Capitalist Economies
    • Y1 - Miscellaneous Categories - - Data: Tables and Charts

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