A DOMINANCE APPROACH TO WELL-BEING INEQUALITY ACROSS COUNTRIES

This paper proposes a dominance approach to study well-being inequality across countries at the world level. We consider a class of well-being indices based on the three attributes considered in the HDI (Human Development Index). Indices are required to satisfy preference for egalitarian marginal distributions of income, health and education, inclination for less correlation between attributes and priority to poor countries for allocating funds to improve health and education. We exhibit sufficient conditions which are easy to implement to check dominance over the defined class of well-being indices.Multidimensioned Welfare; Multivariate Inequality, Well-Being Dimensions, Human Development Index

Equality of opportunity: Definitions and testable conditions, with an application to income in France

We offer a model of equality of opportunity that encompasses different conceptions expressed in the public debate. In addition to circumstances whose effect on outcome should be compensated and eort which represents a legitimate source of inequality, we introduce a third factor, luck, that captures the non-responsibility factors whose impact on outcome should be even-handed for equality of opportunity to be satisfied. Then, we analyse how the various definitions of equality of opportunity can be empirically identified, given data limitations and provide testable conditions. Definitions and conditions resort to standard stochastic dominance tools. Lastly, we develop an empirical analysis of equality of opportunity for income acquisition in France over the period 1979-2000 which reveals that the degree of inequality of opportunity tends to decrease and that the risk of social lotteries appears very similar across the different groups of social origin.Equality of opportunity, Income distribution, Luck, Stochastic dominance.

Equality of Opportunity: Definitions and testable conditions, with an application to income in France

We offer a model of equality of opportunity that encompasses different conceptions expressed in the public debate. In addition to circumstances whose effect on outcome should be compensated and effort which represents a legitimate source of inequality, we introduce a third factor, luck, that captures the non-responsibility factors whose impact on outcome should be even-handed for equality of opportunity to be satisfied. Then, we analyse how the various definitions of equality of opportunity can be empirically identified, given data limitations and provide testable conditions. Definitions and conditions resort to standard stochastic dominance tools. Lastly, we develop an empirical analysis of equality of opportunity for income acquisition in France over the period 1979-2000 which reveals that the degree of inequality of opportunity tends to decrease and that the risk of social lotteries appears very similar across the different groups of social origin.Equality of Opportunity, Income distribution, Luck, Stochastic dominance

Optimal Non-Linear Income Tax when Highly Skilled Individuals Vote with their Feet

This paper examines how allowing individuals to emigrate to pay lower taxes changes the optimal non-linear income tax scheme in a Mirrleesian economy. Type dependent participation constraints are borrowed from contract theory. An individual emigrates if his domestic utility is less than his utility abroad net of migration costs, utilities and costs both depending on productivity. Three social criteria are distinguished according to the agents whose welfare matters. Mobility significantly alters the closed-economy results qualitatively, but also quantitatively as verified by simulations. A curse of the middle-skilled occurs in the first-best. In the second-best, the middle skilled can support the highest average tax rates and the marginal tax rates can be negative. Moveover, preventing emigration of the highly skilled is not necessarily optimal

Shall we Keep the Highly Skilled at Home? The Optimal Income Tax Perspective

We examine how allowing individuals to emigrate to pay lower taxes abroad changes the optimal non-linear income tax scheme in a Mirrleesian economy. An individual emigrates if his domestic utility is less than his utility abroad net of migration costs, utilities and costs both depending on productivity. Three average social criteria are distinguished – national, citizen and resident – according to the agents whose welfare matters. A curse of the middle-skilled occurs in the first-best, and it may be optimal to let some highly skilled leave the country under the resident criterion. In the second-best, under the Citizen and Resident criteria, preventing emigration of the highly skilled is not necessarily optimal because the interaction between the incentive-compatibility and participations constraints may cause countervailing incentives. In important cases, a Rawlsian policymaker should decrease top marginal tax rates to keep everyone at home.optimal income tax, top-income earners, migration, incentive constraints, participation constraints

Do redistributive schemes reduce inequality between individuals?

Redistribution schemes (taxes or benefits) are generally performed at the household level. The issue is to know whether intra-household inequality magnifies or hampers the redistributive effect of the transfers, when the policy-maker focuses on the inequality at the individual level. Depending on the type of the transfer, three properties capturing the idea that the more wealthy the household is, the more unequally it behaves, have been shown to matter. In the moving away approach, the deviation with the equal split make a difference, in the star-shaped approach, the average share counts while the marginal share is relevant for concavity. We complete the analysis by showing how these properties of the intra-household allocation may be recovered through a bargaining model of the household. Then, the DARA and DRRA properties of the utility function emerge as the key conditions for the recovery.Inequality, Intra-household Allocation, Household bargaining, Lorenz curve, Taxation schemes.

Poverty orderings and intra-household inequality: The lost axiom

We investigate under which conditions it is possible to infer the evolution of poverty at the individual level from the knowledge of poverty among households. Poverty measurement is approached by the poverty orderings introduced by Foster and Shorrocks (1988). The analysis is based on a reduced form of household bargaining (Peluso and Trannoy 2007) and provides results in terms of preservation of poverty orderings. We point out the main analogies and differences between inequality and poverty assessment, expressing them in terms of empirically testable conditions. In particular, knowing the change in poverty at the household level is not sufficient to deduce a similar change in poverty at the individual level. We need to know the change in the household income distributions far beyond their poverty line. The focus axiom does not hold in this context.Poverty orderings, intra-household allocation, concavity, focus axiom.

Customer Discrimination and Employment Outcomes: Theory and Evidence from the French Labor Market

The paper investigates the link between the over-exposure of African immigrants to unemployment in France and their under-representation in jobs in contact with customers. We build a two-sector matching model with ethnic sector-specific preferences, economy-wide employer discrimination, and customer discrimination in jobs in contact with customers. The outcomes of the model allow us to build a test of ethnic discrimination in general and customer discrimination in particular. We run the test on French individual data in a cross-section of Employment Areas. Our results show that there is customer discrimination in the French labor market for contact jobs; a decrease in discrimination intensity by one standard deviation would reduce the raw unemployment rate of African immigrants by 4.3 percentage points.Customer Discrimination; Matching frictions; Jobs in contact; Ethnic Unemployment

American baby-losers? Robust indirect comparison of affluence across generations

We propose an indirect and robust method to detect a change in the concentration of economic affluence defined as an aggregate measure of the command over lifetime resources when the full stream of income receipts along the life cycle is unknown and only consumption surveys are available. The method relies on a new stochastic ordering, the “Generalized Top Lorenz” and the key-property of concavity of consumption with respect to wealth. Our application on US data for the period 1980-2002 shows a moderate increase in economic affluence and points out the di¢ cult start in life of people belonging to the "Baby loser generation" (people born in the sixties).concavity, wealth, dominance orderings, consumption.

Equality of opportunity and luck: Denitions and testable conditions, with an application to income in France

We oer a model of equality of opportunity that encompasses dierent conceptions expressed in the public and philosophical debates. In addition to circumstances whose eect on outcome should be compensated and eort which represents a legitimate source of inequality, we introduce a third factor, luck, that captures the random factors whose impact on outcome should be even-handed for equality of opportunity to be satised. Then, we analyse how the various denitions of equality of opportunity can be empirically identied, given data limitations and provide testable conditions. Denitions and conditions resort to standard stochastic dominance tools. Lastly, we develop an empirical analysis of equality of opportunity for income acquisition in France over the period 1979-2000 which reveals that the degree of inequality of opportunity tends to decrease and that the degree of risk of income distributions, conditional on social origin, appears very similar across all groups of social origins.Equality of opportunity, Luck, Stochastic dominance, Income distribution.