Equality of Opportunity: Welfare and Public Policies

This chapter is devoted to discussing the relationship that exists between welfare and public policy through the measurement of inequality. Our narrative outlines how setting the right policy to increase welfare must necessarily come through a multidimensional assessment of inequality. In recent years, a thoughtful frontier of inequality measurement has proposed an analysis of inequality of opportunity to understand and study the differences that exist between and within countries. We aim at discussing how the study of inequality measurement is essential for understanding the channels that contribute to making the income distribution much more unfair over time. For this, we argue on the main methodologies proposed in the literature — discussed in a straightforward manner – both from a theoretical and empirical view. In particular, the empirical illustration through EU-SILC data can help to understand how important such a pathway can be to capture as much as possible the effects on welfare.