Working Paper: NBER ID: w12505
Authors: Flavio Cunha; James Heckman
Abstract: This paper presents a new framework for analyzing inequality that moves beyond the anonymity postulate. We estimate the determinants of sectoral choice and the joint distributions of outcomes across sectors. We determine which components of realized earnings variability are due to uncertainty and which components are due to components of human diversity that are forcastable by agents. Using our tools, we can determine how policies shift persons across sectors and outcome distributions across sectors.
Keywords: inequality; human diversity; sectoral choice; counterfactuals
JEL Codes: D80; I30
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| educational policies (I28) | income inequality (D31) |
| educational policies (I28) | social mobility (J62) |
| individual decision-making processes (D87) | income potential (J17) |
| individual decision-making processes (D87) | earnings outcomes (J31) |
| predictable heterogeneity (C21) | variability in earnings outcomes (J31) |
| unpredictable luck (D80) | variability in earnings outcomes (J31) |