TY - UNPB
T1 - Which Inequality? The Inequality of Resources Versus the Inequality of Rewards
AU - Hopkins, Ed
AU - Kornienko, Tatiana
PY - 2006
Y1 - 2006
N2 - We introduce a new distinction between inequality in initial endowments(e.g., ability, inherited wealth) and inequality of what one canobtain as rewards (e.g., prestigious positions, money). We show that,when society allocates resources via tournaments, these two typesof inequality have opposing effects on equilibrium behavior andwell-being. Greater inequality of rewards hurts most people—boththe middle class and the poor—who are forced into greater effort.Conversely, greater inequality of endowments benefits the middleclass. Thus, the correctness of our intuitions about the implicationsof inequality is hugely affected by the type of inequality considered.
AB - We introduce a new distinction between inequality in initial endowments(e.g., ability, inherited wealth) and inequality of what one canobtain as rewards (e.g., prestigious positions, money). We show that,when society allocates resources via tournaments, these two typesof inequality have opposing effects on equilibrium behavior andwell-being. Greater inequality of rewards hurts most people—boththe middle class and the poor—who are forced into greater effort.Conversely, greater inequality of endowments benefits the middleclass. Thus, the correctness of our intuitions about the implicationsof inequality is hugely affected by the type of inequality considered.
M3 - Discussion paper
T3 - Levine's Bibliography
BT - Which Inequality? The Inequality of Resources Versus the Inequality of Rewards
PB - UCLA Department of Economics
ER -