A New Framework for the Analysis of Inequality

Cunha, Flavio; Heckman, James J.

A New Framework for the Analysis of Inequality

IZA Discussion Paper No. 2565

56 Pages Posted: 29 Jan 2007

See all articles by Flavio Cunha

Flavio Cunha

University of Pennsylvania - Department of Economics

University of Chicago - Department of Economics; National Bureau of Economic Research (NBER); American Bar Foundation; Institute for the Study of Labor (IZA); CESifo (Center for Economic Studies and Ifo Institute)

There are 2 versions of this paper

Date Written: January 2007

Abstract

This paper presents a new framework for analyzing inequality that moves beyond the anonymity postulate. We estimate the determinants of sectoral choice and the joint distributions of outcomes across sectors. We determine which components of realized earnings variability are due to uncertainty and which components are due to components of human diversity that are forecastable by agents. Using our tools, we can determine how policies shift persons across sectors and outcome distributions across sectors.

Keywords: inequality, anonymity postulate, uncertainty, policy evaluation

JEL Classification: I30, D80

Suggested Citation: Suggested Citation

Cunha, Flavio and Heckman, James J., A New Framework for the Analysis of Inequality (January 2007). IZA Discussion Paper No. 2565. Available at SSRN: https://ssrn.com/abstract=960015