JSTOR is a not-for-profit service that helps scholars, researchers, and students discover, use, and build upon a wide range of content in a trusted digital archive. We use information technology and tools to increase productivity and facilitate new forms of scholarship. For more information about JSTOR, please contact support@jstor.org. AbstractDuring the late 1 980s and early 1 990s, taxation of wage income has undergone a change towards a proportional tax regime in many countries. Our analysis shows that gradual tax reforms in Norway may have removed some of the distortions on worker behavior. Moreover, we find that proportional taxes may reduce the inequality in the distribution of disposable household income. Yet, when the distributional consequences are related to changes in individual welfare, we find that rich households may benefit far more than households at the other tail of the income distribution, because they earn more without any significant increase in effort.

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International audienceThis paper employs the theory of equality of opportunity, described in Roemer's book (Equality of Opportunity, Harvard University Press, 1998), to compute the extent to which tax-and-transfer regimes in 11 countries equalize opportunities among citizens for income acquisition. Roughly speaking, equality of opportunity for incomes has been achieved in a country when it is the case that the distributions of post-fisc income are the same for different types of citizen, where a citizen's type is defined by the socioeconomic status of his parents. Intuitively, a country will have equalized opportunity if the chances of earning high (or low) income are equal for citizens from all family backgrounds. Of course, pre-fisc income distributions, by type, will not be identical, as long as the educational system does not entirely make up for the disadvantage that children, who come from poor families face, but the tax-and-transfer system can play a role in rectifying that inequality. We include, in our computation, two numbers that summarize the extent to which each country's current fiscal regime achieves equalization of opportunities for income, and the deadweight loss that would be incurred by moving to the regime that does.

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This paper compares income inequality and income mobility in the Scandinavian countries and the United States during the 1980's. The results demonstrate that inequality is greater in the United States than in the Scandinavian countries and that the ranking of countries with respect to inequality remains unchanged when the accounting period of income is extended from one to 11 years. The pattern of mobility turns out to be remarkably similar despite major differences in labor market and social policies between the Scandinavian countries and the United States.Keywords: Income inequality, income mobility. JEL classification: D31Acknowledgement The authors would like to thank the discussant Stephen P Jenkins for helpful comments. We also thank Stephen E. Rhody and seminar pa rticipants at the University of Michigan and the University of Western Ontario.