Inequality of Income Acquisition: The Role of Childhood Circumstances

30 Pages Posted: 4 Jan 2016

See all articles by Andreas Peichl

Andreas Peichl

ZEW – Leibniz Centre for European Economic Research; University of Mannheim - School of Economics (VWL); IZA Institute of Labor Economics; University of Essex - Institute for Social and Economic Research (ISER)

Paul Hufe

Centre for European Economic Research (ZEW)

John E. Roemer

Yale University - Department of Political Science; Yale University - Cowles Foundation

Martin Ungerer

ZEW – Leibniz Centre for European Economic Research

Date Written: December 2015

Abstract

Many studies have estimated the effect of circumstances on income acquisition. Perhaps surprisingly, the fraction of inequality attributable to circumstances is usually quite small – in the advanced democracies, on the order of 20%. One reason for this is the lack of data on circumstance variables in empirical research. Here, we argue that all behaviors and accomplishments of children should be considered the consequence of circumstances: That is, an individual should not be considered to be responsible for her choices before an age of consent is reached. Using two data sets that contain data on childhood accomplishments, other environmental circumstances, and the income as an adult, we compute that the fraction of income inequality due to circumstances in the US is over 45%, and in the UK it is over 31%.

Keywords: Equality of Opportunity; Earnings Inequality ; Lower bounds; Early childhood achievements

JEL Classification: D63, D3

Suggested Citation

Peichl, Andreas and Hufe, Paul and Roemer, John E. and Ungerer, Martin, Inequality of Income Acquisition: The Role of Childhood Circumstances (December 2015). ZEW - Centre for European Economic Research Discussion Paper No. 15-084. Available at SSRN: https://ssrn.com/abstract=2710665 or http://dx.doi.org/10.2139/ssrn.2710665

Andreas Peichl (Contact Author)

ZEW – Leibniz Centre for European Economic Research ( email )

P.O. Box 10 34 43
L 7,1
D-68034 Mannheim, 68034
Germany

University of Mannheim - School of Economics (VWL) ( email )

Mannheim 68131
Germany

IZA Institute of Labor Economics ( email )

P.O. Box 7240
Bonn, D-53072
Germany

University of Essex - Institute for Social and Economic Research (ISER)

Wivenhoe Park
Colchester CO4 3SQ
United Kingdom

Paul Hufe

Centre for European Economic Research (ZEW) ( email )

P.O. Box 10 34 43
L 7,1
D-68034 Mannheim, 68034
Germany

John E. Roemer

Yale University - Department of Political Science ( email )

Box 208269
New Haven, DC 06520-8269
United States
203-432-5249 (Phone)
203-432-6196 (Fax)

HOME PAGE: http://pantheon.yale.edu/~jer39/

Yale University - Cowles Foundation

Box 208281
New Haven, CT 06520-8281
United States

Martin Ungerer

ZEW – Leibniz Centre for European Economic Research ( email )

P.O. Box 10 34 43
L 7,1
D-68034 Mannheim, 68034
Germany

Register to save articles to
your library

Register

Paper statistics

Downloads
47
Abstract Views
330
PlumX Metrics