Equality of Opportunity and Redistribution in Europe

21 Pages Posted: 19 Dec 2010

See all articles by Lina Dunnzlaff

Lina Dunnzlaff

affiliation not provided to SSRN

Dirk Neumann

University of Cologne

Judith Niehues

University of Cologne

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)

Abstract

The concept of equality of opportunity (EOp) goes back to Roemer (1993, 1998) who argues that a society shall guarantee its members equal access to advantage regardless of their circumstances, while holding them responsible for turning that access into actual advantage by the application of effort. Such arguments have been on the political agenda across the European Union, where the recent enlargements have brought together countries with rather different economic, social, and political backgrounds. This paper investigates how family background influences income acquisition in 15 European countries. It also scrutinizes how governments affect EOp through the design of their tax and transfer schemes. Our overall results suggest that the link between family background and economic success is usually tighter in relatively poor countries than in rich countries. Moreover, we find a clear country clustering for the Scandinavian, the Continental European, and the Anglo-Saxon countries. For Eastern Europe, our results are less definite. Looking at the impact of the tax and benefit schemes in the EU, it can be concluded that both taxes and transfers reduce inequality of opportunities, with social benefits typically playing the key role. Furthermore, the equalizing impacts of the tax benefit system on inequality of opportunity differ substantially from the ones observed when referring to the traditional notion of inequality of outcomes.

Keywords: equality of opportunity, inequality, redistribution

JEL Classification: D31, H24, I38

Suggested Citation

Dunnzlaff, Lina and Neumann, Dirk and Niehues, Judith and Peichl, Andreas, Equality of Opportunity and Redistribution in Europe. IZA Discussion Paper No. 5375, Available at SSRN: https://ssrn.com/abstract=1728332

Lina Dunnzlaff (Contact Author)

affiliation not provided to SSRN

No Address Available

Dirk Neumann

University of Cologne ( email )

Albertus-Magnus-Platz
Cologne, 50923
Germany

Judith Niehues

University of Cologne ( email )

Albertus-Magnus-Platz
Cologne, 50923
Germany

Andreas Peichl

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

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