Measurement and Evaluation of Equality of Opportunity: A Numerical Look at Education, Health, and Income Inequality

Haqiqi, Iman and Bahalou, Marziyeh and Hamidi, Razieh (2014): Measurement and Evaluation of Equality of Opportunity: A Numerical Look at Education, Health, and Income Inequality.

Abstract

Inequality in access to “opportunity” is one of the significant factors determining income inequality. The purpose of this paper is to analyze the economic effects of change in the initial allocation of resources and the redistribution of opportunity in terms of access to education and health. In this research we use a Computable General Equilibrium model, focusing on the initial distribution of educational opportunity and allocation of available resources. In our model, the difference among households is due to differences in opportunity, skill, and endowments of capital and labor. We introduce a method to quantify the opportunity premium. The model is calibrated based on Micro Consistent Matrix (MCM) of the Iranian economy. The results indicate that redistribution of opportunity and reallocations of educational resources can improve all equality indices. An important conclusion is that the income gap increases faster than the opportunity gap. Therefore, a reduction in income inequality is possible by small improvements in the equality of opportunity.

• Item Type: MPRA Paper
• Language: English
• Keywords: equality of opportunity; social-choice theory; income distribution; education and inequality; equality of resources; general equilibrium
• Subjects: C - Mathematical and Quantitative Methods > C6 - Mathematical Methods ; Programming Models ; Mathematical and Simulation Modeling > C68 - Computable General Equilibrium Models; D - Microeconomics > D3 - Distribution > D31 - Personal Income, Wealth, and Their Distributions; D - Microeconomics > D5 - General Equilibrium and Disequilibrium > D58 - Computable and Other Applied General Equilibrium Models; E - Macroeconomics and Monetary Economics > E2 - Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy > E24 - Employment ; Unemployment ; Wages ; Intergenerational Income Distribution ; Aggregate Human Capital ; Aggregate Labor Productivity; H - Public Economics > H7 - State and Local Government ; Intergovernmental Relations > H75 - State and Local Government: Health ; Education ; Welfare ; Public Pensions; I - Health, Education, and Welfare > I1 - Health > I14 - Health and Inequality; I - Health, Education, and Welfare > I2 - Education and Research Institutions > I24 - Education and Inequality; O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development > O15 - Human Resources ; Human Development ; Income Distribution ; Migration

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