Economic Policy and Equality of Opportunity

Abstract

We employ equality of opportunity (EOP) definitions from the literature on distributive justice to a quantitative model featuring intergenerational human capital investments and luck. When calibrated to the US, the model-implied degree of EOP differs substantially depending on whether one considers it ethical to reward offspring for the effort of previous generations. Despite reducing intragenerational inequality, education subsidies do little to promote EOP. This is because if one thinks intergenerational investments should be rewarded, there is little room for improvement to begin with; in the opposite case, much stronger redistribution is needed for the policies to have a quantitative impact.