Dirk Van de gaer

• Ghent University

Using a simple model of family decision making we examine the processes by which the wealth distribution changes over the generations, focusing in particular on the division of fortunes through inheritance and the union of fortunes through marriage. We show that the equilibrium wealth distribution exists under standard assumptions and has a Pareto...

People spend a lot of their time commuting. From a social welfare perspective, commuting is associated with an externality related to traffic and an internality related to health. A social planner should take both into consideration when planning tax reform. Research in health economics indicates that spending time in traffic has long run adverse m...

People spend a lot of their time commuting. Research in health economics indicates that spending time in traffic has long run adverse mental and physical health consequences. Literature suggests that, when making decisions about commuting, the individual might underestimate these long run consequences and take them insufficiently into consideration...

This is an interview by the Erasmus Journal for Philosophy and Economics with Kasper Lippert-Rasmussen, Xavier Ramos, and Dirk Van de gaer, conducted as part of a roundtable on the philosophy and economics of discrimination and inequality. The interview covers the concepts of discrimination and inequality; the current state of the literature on mea...

The theoretical literature on inequality of opportunity formulates basic properties that measures of inequality of opportunity should have. Standard methods for the measurement of inequality of opportunity determine the inequality in counterfactual outcome distributions that are constructed by statistical methods. We show that, when standard parame...

We evaluate social progress on the basis of panel data on individual incomes by comparing the value of social welfare in the observed panel data to its value in a situation where individuals receive their first period income in each period. We derive necessary conditions for the welfare gain to be positive, and show how it can be decomposed in an e...

Recent literature has suggested many ways of measuring equality of opportunity. We analyze in a systematic manner the various approaches put forth in the literature to show whether and to what extent different choices matter empirically. Drawing on data for most European countries for 2005 and 2011, we find that the choice between ex‐ante and ex‐po...

In een opiniestuk over de hervorming van de Belgische werkloosheidsuitkeringen stellen we de vaak gehoorde stelling dat een sterkere degressiviteit van werkloosheidsuitkeringen een gunstig effect heeft in vraag

Texte d’une ‘carte blanche’ collective publiée dans le journal Le Soir, concernant une décision du gouvernement Belge visant à faire baisser plus rapidement les allocations de chômage.

We report on a randomized controlled experiment in Mauritius by the Joint Child Health Project. This longitudinal study followed a cohort of children from different socio-economic backgrounds to examine educational outcomes among children in high and low-quality preschools. The findings show that quality of preschool education had no significant ef...

Equality of opportunity is a theory in which personal responsibility plays a central part in determining whether a social system is just. Individuals are held responsible for some characteristics, called efforts, and not responsible for other characteristics, called circumstances. Marc Fleurbaey and Walter Bossert point out that this results in two...

We put together the different conceptual issues involved in measuring inequality of opportunity, discuss how these concepts have been translated into computable measures, and point out the problems and choices researchers face when implementing these measures. Our analysis identifies and suggests several new possibilities to measure inequality of o...

We propose a characterization of an aggregate measure of growth that takes into account the initial economic conditions of individuals. Our measure is a weighted aver- age of individuals’ income growth with weights that are decreasing with the rank of the individual in the initial income distribution. We apply our theoretical framework to evaluate...

We consider an economy in which agents differ in terms of productivity (that may be either high or low) as well as in their preferences for labour. Individuals decide whether or not they enter the labour force. In this context and under asymmetric information, the optimal tax schedules derived under the Egalitarian Equivalence criterion (Fleurbaey...

We propose a methodology to evaluate social projects from an (equality of) opportunity perspective by looking at their effect on (parts of) the distribution of outcomes conditional on morally irrelevant characteristics, taken here to be parental education level and indigenous background. The methodology is applied to evaluate the effects on childre...

We propose a characterization of an aggregate measure of growth that takes into account the initial economic conditions of individuals. Our measure is a weighted average of individuals’ income growth with weights that are decreasing with the rank of the individual in the initial income distribution. We apply our theoretical framework to evaluate th...

We introduce and characterize a new measure of aggregate income growth that allows us to give more weight to individuals with lower individual income growth. Our measure includes several important measures of directional mobility encountered in the literature. The empirical application compares the measure of income growth between the USA and Germa...

We put together the different conceptual issues involved in measuring inequality of opportunity, discuss how these concepts have been translated into computable measures, and point out the problems and choices researchers face when implementing these measures. Our analysis identifies and suggests several new possibilities to measure inequality of o...

We formalize the concept of upward structural mobility and use the framework of subgroup consistent mobility measurement to derive a relative and an absolute measure of mobility that is increasing in upward structural mobility and compatible with the notion of exchange mobility. In our empirical illustration, we contribute substantively to the ongo...

We formalize the concept of upward structural mobility and use the framework of subgroup consistent mobility measurement to derive a relative and an absolute measure of mobility that is increasing in upward structural mobility and compatible with the notion of exchange mobility. In our empirical illustration, we contribute substantively to the ongo...

We develop a directional measure of income mobility. This measure can be expresssed as a rank dependent mean of the individual mobilities in society and allows to give more weight to lower individual mobilities. The class includes the measures of directional mobility encountered in the literature. We apply our measure to compare income mobility bet...

We present a model of conflict in which each group decides to claim the country’s income and invest in arms or to accept a group neutral allocation of income and not invest in arms. Apart from the usual cooperative or conflictual societies, their strategic choice can result in hierarchically stratified societies in which one group is dominant. We s...

This paper examines optimal redistribution in a model with high- and low-skilled individuals with heterogeneous tastes for labor. We compare the extent to which optimal policies based on different normative criteria obey the principles of compensation (for differential skills) and responsibility (for preferences for labor) when labor supply is alon...

Discussion document prepared for the Marseille meeting, 22-23 May 2009. Abstract In this document we divide the empirical evidence on inequality of opportunity in three parts. The first part tries to distinguish offensive from inoffensive inequality, the second compares conditional distributions and the final part relies on empirical evidence to co...

This paper examines optimal redistribution in a model with high and low-skilled individuals with heterogeneous tastes for labor, that either work or not. With such double heterogeneity, traditional Welfarist criteria including Utilitarianism fail to take the compensation-responsibility trade-off into account. As a response, several other criteria h...

In a game of imperfect information, the paper analyses whether different types of intervention by third parties can ensure that political (ethnic, religious, social, etc.) groups within a country will pursue a cooperative strategy and how easy it is to predict their effects. We conclude that a strong boycott is the only instrument that is always ef...

We formalize the concept of structural mobility and use the framework of subgroup consistent mobility measurement to derive a relative and an absolute measure of mobility that is increasing both in upward structural mobility and exchange mobility. In our empirical illustration, we contribute substantively to the ongoing debate about mobility rankin...

Our concern is for income inequalities that may result from non-welfaristic redistribution schemes. We show that for large classes of income functions Lorenz dominance results can be found in the comparison of two egalitarian equivalent mechanisms. Comparisons of different conditionally egalitarian mechanisms only yield poverty dominance results. I...

We show that the way individual income data should be aggregated into an index of inequality in order to explain countries' growth performance is theory specific. A simulation set-up shows that the use of a wrong measure might obscure the inequality - growth relationship and that the relative performance of different measures of inequality can be i...

This paper examines the consequences of specification error when transition matrices are used to analyse patterns of intergenerational mobility. We show that classical measurement error in both the child’s and parent’s earnings can lead to biased results, with summary mobility measures biased by as much as 20% in some cases. Furthermore our results...

In this paper we use a semi-parametric estimation procedure to examine differences in the distribution of wages for black and white male workers in the US. In keeping with recent studies we find that differences in cognitive skills are an important determinant of the black-white wage gap and can explain almost the entire male racial wage gap among...

In a game of imperfect information, the paper analyzes whether different types of intervention by third parties can ensure that political (ethnic, religious, social, . . . ) groups within a country will pursue a cooperative strategy and how easy it is to predict their effects. We conclude that a strong boycott is the most effective instrument, then...

This paper analyzes the consequences of non-classical measurement error for distributional analysis. We show that for a popular set of distributions negative correlation between the measurement error (u) and the true value (y) may reduce the bias in the estimated distribution at every value of y. For other distributions the impact of non-classical...

We compute optimal linear taxes on labor income with quasilinear preferences between income and labor. Agents differ in their productivity and in their taste for leisure. A responsibility sensitive egalitarian wants to compensate for the former differences but not for the latter. This intuition is captured by a social planner that wants to equalize...

Many third world countries seem to fail to create a growth-promoting and peaceful institutional framework and are plagued by ethnic, religious or social conflict. This paper focuses on the impact of primary commodities on group behavior and, thus, on the nature of the resulting societies. Strategies are analyzed in a basic one-shot game with two pl...

We propose a new class of mobility measures which we call “measures of distributional difference.” Members of this new class measure mobility as integrated weighted distributional difference. We demonstrate that many leading measures of mobility proposed in the literature are members of this class. Our approach therefore permits a considerable unif...

We characterize two different approaches to the idea of equality of opportunity. Roemer's social ordering is motivated by a concern to compensate for the effects of certain (non-responsibility) factors on outcomes. Van de gaer's social ordering is concerned with the equalization of the opportunity sets to which people have access. We show how diffe...

We analyze the consequences of three types of specification error for cumulative conditional distribution functions F(y | a) : measurement error in y, in a and omitted conditioning variables. The paper uses exact results to obtain conditions under which the effect of the misspecification on the computed cumulative distribution function can be signe...

The institutional school of economics states that customary law incorporates and interacts with changes in the environment. This observation stands out clearly in the case of the Cordillera villages. Population pressure necessitated an intensification of agriculture thereby requiring the transformation of common land into privately owned land. The...

We axiomatize three different motivations for being concerned about intergenerational mobility: mobility as a description of movement, as an indication of equality of opportunity, and as an indication of equality of life chances. These three motivations are shown to be incompatible. None of the existing measures is acceptable as an indicator of equ...

Time and value are related concepts that influence human behaviour. Although classical topics in human thinking throughout the ages, few environmental economic non-market valuation studies have attempted to link the two concepts. Economists have estimated non-market environmental values in monetary terms for over 30 years. This history of valuation...

This paper examines how the first-best models of compensation based on the agents' talents and responsibilities analyzed in some recent contributions can be extended to a second-best context. A few social criteria are proposed and compared to alternative approaches by Roemer and Van de gaer.

This paper derives the asymptotic normality of the distribution of differences in the Atkinson/Kolm and generalised entropy inequality measures when incomes are correlated. We illustrate the procedure by calculating the difference in inequality before and after tax in Ireland.

Existing research applying the Personal Wellbeing Index (PWI) in China is restricted to urban and rural samples. There are no studies for Chinese off-farm migrants. The specific aims of this study are (a) ascertain whether Chinese off-farm are satisfied with their lives; (b) investigate the equivalence of the PWI in terms of its psychometric proper...

This paper derives the asymptotic normality of the distribution of difference in the Atkinson/Kolm and generalised entropy inequality measures when incomes are correlated. We illustrate the procedure by calculating the difference in inequality before and after tax in Ireland. Our empirical results suggest that the positive correlation between incom...

This paper explores the link between the measurement of intergenerational mobility and the notion of equality of opportunity. We show how recently proposed theories of equality of opportunity can be meaningfully adapted to the intergenerational context. This throws a new light on the interpretation of existing mobility measures: these may be intere...

This paper examines how a traditional village deals with the consequences of population growth. The increase in population demands more intensive use of the land which requires the transformation of commonly-owned land into privately-owned land. Customary law contains clear prescriptions about the circumstances under which a couple can privatize la...

We compare directions of welfare improving marginal tax reform in a situation of involuntary unemployment. We show the role of distributional considerations in assessing these welfare effects: preferences between macroeconomic variables shift with the degree of inequality aversion. To get a better insight into the importance of distributional consi...

Many third world countries are plagued by civil conflict. This paper focuses on the im- pact of primary commodities on group behaviour. Strategies are analysed in a two stage game with two players and two strategies in which beliefs vis-a-vis the other player deter- mine the equilibria in the absence of a dominating strategy equilibrium. We show th...

If a member of a household dies, this leads to substantial costs for the household. These costs are direct costs associated with burial rituals and indirect costs due to the loss of income. As a consequence, households would like to insure against this risk. Moral hazard issues hardly arize for burial insurance. Hence, if the asymmetric information...