Publications
Purpose:
We analyze equality of opportunity for earnings acquisition in France between 1973 and 1993 defining individual circumstances by parental earnings. We compare two different definitions of circumstances. In the first one they are measured by the father's earnings level, in the second one by the father's rank in the earnings distribution.
Methodology:
First we use stochastic dominance tools. Then we decompose the evolution of inequality of opportunity using the mean logarithmic deviation and the results of regressions of descendants’ earnings on their parents’ earnings.
Findings:
Inequality of opportunity has remained stable when conditioning on the earnings level of the father, whereas it has diminished when conditioning on his rank in the earnings distribution. The former result is explained by the stable intergenerational earnings elasticity. The latter by the decreasing wage inequality in the previous generation.
Originality:
Our analysis emphasizes that the assessment of equality of opportunity and its evolution is very sensitive to the partition of circumstances used. Moreover, it stresses the complementarity between the discrete and the continuous approaches for measuring inequality of opportunity.
Chapitre 8
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Van Parijs (1995) with basic income and Kolm (2005) with ELIE transfers have both revisited the ethical foundations and the redistributive patterns of the tax system. Despite being formally close, both propositions diverge because the financing of basic income is not really guaranteed and the treatment by ELIE transfers of “eccentric productive people” who choose not to work is not obvious. Both projects remain nevertheless compatible: from a philosophical point of view, Van Parijs tries to equalise individuals’ “external endowments”, while Kolm exploits only their “internal endowments”; from an economic point of view, TECIE transfers which would be based on “external endowments” could thus complete ELIE transfers stemming from “internal endowments”. The first examination of this “hybridisation” provides the framework of our conclusion.
In this chapter we consider the effects of exogenous energy shocks on an agent-based macroeconomic system and study the out-of-equilibrium dynamics. We introduce automatic stabilizers that allow the artificial economy to absorbe the shocks. Two types of macroeconomic stabilization policies are implemented: a consumer subsidy scheme that compensates households for their loss in purchasing power, and a tax reduction scheme that affects both households and firms to support consumption and investments. Policy experiments are then carried out to evaluate the effectiveness of these macroeconomic policies. Finally, we are able to distinguish between short- and long-term effects of the policy measures.
Using French data, we show that ELIE performs rather weakly when it comes to addressing the issue of poverty. Yet, eliminating poverty is also a valid normative property of any redistribution mechanism. We suggest combining ELIE with another redistributive solution aimed specifically at alleviating poverty: the personal allowance (PERAL) mechanism (Leroux 2004 and 2007). We argue that ELIE and the PERAL mechanism, more than being compatible, are in fact complementary.
The ELIE scheme of Kolm taxes labour capacities instead of labour income in order to circumvent the distortive effect of taxation on labour supply. Still, Kolm does not study the impact of ELIE on human capital formation and investment. In this paper, we build an overlapping generations (OLG) model with heterogenous agents and endogenous growth driven by investment in human capital. We study the effect of ELIE on education investment and other aggregate economic variables. Calibrating the model to French data, we highlight a trade-off between growth and redistribution. With a perfect credit market, ELIE is successful in reducing inequalities and poverty, but it is at the expense of lower investment in education and slower growth. In an economy with an imperfect credit market where individuals cannot borrow to educate, the trade-off between growth and redistribution is not overturned but is less severe. However, it is possible to overturn completely that trade-off simply by changing the base of taxation for the young generation which is equivalent to subsidising education.
