Abstract
This paper seeks to compare income distributions from the opportunity advantage viewpoint. That is a measure of how likely it is for a representative individual of one society to receive a higher income than a representative individual of another. Opportunity advantage tries to measure the income opportunities a society offers to an individual, relative to other societies, evaluated from the “veil of ignorance” viewpoint. We show that this notion can be precisely formalised and results in a complete and cardinal income distribution evaluation. We also present an empirical illustration of the gender differences in wage distributions in Spain after the financial crisis. The results show that this criterion offers new insights into the evaluation of differences in opportunity.
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Acknowledgements
We thank two anonymous referees and the Associate Editor K. Decancq for very helpful comments that led to a substantial rewriting and improvement of the original paper. We have also benefited from the discussion with Joan Esteban. The first author acknowledges financial support from the Spanish Ministerio de Economía, Industria y Competitividad under projects ECO2015-65820P and PID2019-107081GB-I00, the Generalitat Valenciana under PROMETEO 2109/037, and IMeRA. The second author acknowledges financial support from the Spanish Ministerio de Economía, Industria y Competitividad under project ECO2015-65408-R (MINECO/FEDER).
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Herrero, C., Villar, A. Opportunity advantage between income distributions. J Econ Inequal 19, 785–799 (2021). https://doi.org/10.1007/s10888-021-09488-5
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DOI: https://doi.org/10.1007/s10888-021-09488-5
Keywords
- Domination probabilities
- Income distribution
- Opportunity advantage
- Ranking distributions
- Veil of ignorance