Must-Read: Ravi Kanbur and Joseph Stiglitz: Dynastic Inequality, Mobility and Equality of Opportunity
…is that it is wrong to focus on inequality of outcomes in a ‘snapshot.’ Intergenerational mobility and ‘equality of opportunity’, so the argument goes, is what matters for normative evaluation. We ask what pattern of intergenerational mobility leads to lower inequality not between individuals but between the dynasties to which they belong? And how does this pattern in turn relate to commonly held views on what constitutes equality of opportunity? Focusing on bistochastic transition matrices in order to hold constant the steady state snapshot income distribution, we develop an explicit partial ordering which ranks matrices on the criterion of inequality between infinitely lived dynasties.