Book Chapter•
Income inequality and income mobility
01 Jan 2007-pp 2275-2277
About: The article was published on 2007-01-01 and is currently open access. It has received 119 citations till now. The article focuses on the topics: Income distribution & Income inequality metrics.
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TL;DR: In this article, the authors introduce a formal representation of income mobility as an equalizer of permanent income, which is called a mobility curve and forms the basis for comparison of income distributions according to income mobility.
Abstract: Do market-orientated economies with relatively large cross-sectional levels of inequality have higher income mobility and therefore less permanent inequality? To answer this question, we introduce a formal representation of income mobility as an equalizer of permanent income. The proposed representation is called a mobility curve and forms the basis for comparison of income distributions according to income mobility. The mobility curve captures the extent to which the distribution of permanent income is equalized because of changes in individuals' relative income over time. From the derivative of the mobility curve, we can assess the equalizing effect of income mobility in the lower, middle and upper part of the distribution of permanent income. The mobility curve allows us to develop dominance criteria that provide partial orderings of income distributions according to income mobility. We obtain complete orderings through an axiomatically justified family of rank-dependent measures of income mobility, which summarizes the informational content of the mobility curve. We illustrate the usefulness of these methods by re-examining previous findings of income mobility across countries. In contrast to the conclusions in previous studies, we find that changes in relative income over time contribute more (as much) to equality in permanent income in the US as in the Nordic countries and Germany.
12 citations
TL;DR: In this article, the authors proposed a two-step aggregation method for measuring long-term income inequality and income mobility, where mobility is defined as an equalizer of longterm income, and they employed an axiomatic approach to justify the introduction of a generalized family of rank-dependent measures of inequality, where the distributional weights, as opposed to the Mehran-Yaari family, depend on income shares as well as on population shares.
Abstract: This paper proposes a two-step aggregation method for measuring long-term income inequality and income mobility, where mobility is defined as an equalizer of long-term income. First, the income stream of each individual is aggregated into a measure of permanent income, which accounts for the costs associated with income fluctuations. Consequently, mobility will have an unambiguously positive impact on social welfare in the sense that for two societies that have identical short term income distributions, the social welfare will be greatest for the society which exhibits most mobility. The second step consists of aggregating permanent incomes across individuals into measures of social welfare, inequality and mobility. To this end, we employ an axiomatic approach to justify the introduction of a generalized family of rank-dependent measures of inequality, where the distributional weights, as opposed to the Mehran-Yaari family, depend on income shares as well as on population shares. Moreover, a subfamily is shown to be associated with social welfare functions that have intuitively appealing interpretatio ns. Further, the generalized family of inequality measures provides several new interpretations of the Gini-coefficient. The proposed family of income mobility also proves to encompass standard measures of income mobility, depending on the assumptions made about the interpersonal preferences and the credit market.
12 citations
Cites background from "Income inequality and income mobili..."
...This relationship has motivated a considerable theoretical and applied literature, starting with Shorrocks (1978), who employed a two-step aggregation approach to assess mobility as an equalizer of long-term income....
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...In Shorrocks (1978) as well as in most subsequent empirical studies of income mobility, the average real income over several years is used as an approximation for permanent income....
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...This motivated a considerable theoretical and empirical literature, starting with Shorrocks (1978), where mobility is defined as an equaliser of long-term or permanent incomes....
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...In Shorrocks (1978) as well as in most subsequent empirical studies of income mobility, the average (real) income over several years is used as an approximation for permanent income.2 This means that the two-period income streams (50, 100) and (75, 75) will be considered to produce the same level…...
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...In fact, this problem was acknowledged by Shorrocks (1978), and is a common criticism of studies of mobility as an equaliser of long-term average incomes (see e.g. Chakravarty et al., 1985; Aktinson et. al., 1992 and Fields and Ok, 1999)....
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TL;DR: In this article, the authors explored the distributional consequences of farm income mobility in Scotland, focusing on the extent to which farm income inequality is a chronic as opposed to a temporary phenomenon and on the nature of the dynamic processes driving changes in farm income inequalities over time.
Abstract: The paper explores the distributional consequences of farm income mobility in Scotland, focusing on the extent to which farm income inequality is a chronic as opposed to a temporary phenomenon and on the nature of the dynamic processes driving changes in farm income inequality over time. The empirical results reveal that the majority of farm income inequality was long-run or structural in nature, reflecting differences in both farm business size and farm-specific factors such as land quality, managerial ability and business structures. Evidence of absolute convergence in farm incomes is explained by short-run adjustments towards equilibrium or target incomes conditional upon prices, technology and farm business size, with farm business growth conditional upon survival found to have had no significant redistributive effect.
12 citations
Cites background or methods from "Income inequality and income mobili..."
...The extent of such equalisation if the measurement period is extended from one to T years is captured by the mobility index due to Shorrocks (1978):...
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...We complement this work by proposing an alternative to the Shorrocks (1978) mobility index that measures the extent to which incomes are equalised over the longer term based on equilibrium rather than multiyear average incomes....
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...The extent of such equalisation if the measurement period is extended from one to T years is captured by the mobility index due to Shorrocks (1978): MT ¼ 1 GðyAÞPT t¼1 wtGðytÞ ð1Þ...
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...Section 3 employs the Shorrocks (1978) mobility index to provide a first look at the extent to which farm incomes are equalised over the longer term....
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TL;DR: In this paper, the authors examined mobility levels and trends for U.S. working-age families, overall and by race, during the time span 1967-2004, using data from the Panel Study of Income Dynamics and a number of mobility concepts and measures drawn from the literature.
Abstract: Much of America's promise is predicated on the existence of economic mobility - the idea that people are not limited or defined by where they start, but can move up the economic ladder based on their efforts and accomplishments. Family income mobility - changes in individual families' real incomes over time - is one indicator of the degree to which the eventual economic wellbeing of any family is tethered to its starting point. In the United States, family income inequality has risen from year to year since the mid-1970s, raising questions about whether long-term income is also increasingly unequally distributed; changes over time in mobility, which can offset or amplify the cross-sectional increase in inequality, determine the degree to which the inequality of longer-term income has risen in parallel. Using data from the Panel Study of Income Dynamics and a number of mobility concepts and measures drawn from the literature, we examine mobility levels and trends for U.S. working-age families, overall and by race, during the time span 1967-2004. By most measures, we find that mobility is lower in more recent periods (the 1990s into the early 2000s) than in earlier periods (the 1970s). Most notably, mobility of families starting near the bottom has worsened over time. However, in recent years, the down-trend in mobility is more or less pronounced (or even non-existent) depending on the measure, although a decrease in the frequency with which panel data on family incomes are gathered makes it difficult to draw firm conclusions. Measured relative to the overall distribution or in absolute terms, black families exhibit substantially less mobility than whites in all periods; their mobility decreased between the 1970s and the 1990s, but no more than that of white families, although they lost ground in terms of relative income. Taken together, this evidence suggests that over the 1967-to-2004 time span, a low-income family's probability of moving up decreased, families' later year incomes increasingly depended on their starting place, and the distribution of families' lifetime incomes became less equal.
11 citations
Additional excerpts
... Shorrocks (1978) proposes a measure known as mobility‐as‐equalizer, which compares the inequality of long‐term income (over t years) with the (weighted average) inequality of …...
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References
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TL;DR: This article used Social Security Administration longitudinal earnings micro data since 1937 to analyze the evolution of inequality and mobility in the United States and found that long-term mobility among all workers has increased since the 1950s but has slightly declined among men.
Abstract: This paper uses Social Security Administration longitudinal earnings micro data since 1937 to analyze the evolution of inequality and mobility in the United States. Annual earnings inequality is U-shaped, decreasing sharply up to 1953 and increasing steadily afterward. Short-term earnings mobility measures are stable over the full period except for a temporary surge during World War II. Virtually all of the increase in the variance in annual (log) earnings since 1970 is due to increase in the variance of permanent earnings (as opposed to transitory earnings). Mobility at the top of the earnings distribution is stable and has not mitigated the dramatic increase in annual earnings concentration since the 1970s. Long-term mobility among all workers has increased since the 1950s but has slightly declined among men. The decrease in the gender earnings gap and the resulting substantial increase in upward mobility over a lifetime for women are the driving force behind the increase in long-term mobility among all workers.
546 citations
TL;DR: In this paper, the authors estimate trends in intergenerational economic mobility by matching men in the Census to synthetic parents in the prior generation, finding that mobility increased from 1950 to 1980 but has declined sharply since 1980.
Abstract: We estimate trends in intergenerational economic mobility by matching men in the Census to synthetic parents in the prior generation. We find that mobility increased from 1950 to 1980 but has declined sharply since 1980. While our estimator places greater weight on location effects than the standard intergenerational coefficient, the size of the bias appears to be small. Our preferred results suggest that earnings are regressing to the mean more slowly now than at any time since World War II, causing economic differences between families to become more persistent. However, current rates of positional mobility appear historically normal.
239 citations
TL;DR: Gender- and age-related changes in sexual orientation identity from early adolescence through emerging adulthood in 13,840 youth ages 12–25 employing mobility measure M, a measure modified from its original application for econometrics is described.
Abstract: This study investigated stability and change in self-reported sexual orientation identity over time in youth. We describe gender- and age-related changes in sexual orientation identity from early adolescence through emerging adulthood in 13,840 youth ages 12–25 employing mobility measure M, a measure we modified from its original application for econometrics. Using prospective data from a large, ongoing cohort of U.S. adolescents, we examined mobility in sexual orientation identity in youth with up to four waves of data. Ten percent of males and 20% of females at some point described themselves as a sexual minority, while 2% of both males and females reported ever being “unsure” of their orientation. Two novel findings emerged regarding gender and mobility: (1) Although mobility scores were quite low for the full cohort, females reported significantly higher mobility than did males. (2) As expected, for sexual minorities, mobility scores were appreciably higher than for the full cohort; however, the gender difference appeared to be eliminated, indicating that changing reported sexual orientation identity throughout adolescence occurred at a similar rate in female and male sexual minorities. In addition, we found that, of those who described themselves as “unsure” of their orientation identity at any point, 66% identified as completely heterosexual at other reports and never went on to describe themselves as a sexual minority. Age was positively associated with endorsing a sexual-minority orientation identity. We discuss substantive and methodological implications of our findings for understanding development of sexual orientation identity in young people.
193 citations
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01 Jan 2013
TL;DR: In this article, the authors survey the literature on income mobility, aiming to provide an integrated discussion of mobility within and between-generations, and review mobility concepts, descriptive devices, measurement methods, data sources, and recent empirical evidence.
Abstract: We survey the literature on income mobility, aiming to provide an integrated discussion of mobility within- and between-generations. We review mobility concepts, descriptive devices, measurement methods, data sources, and recent empirical evidence.
156 citations
TL;DR: This article developed a new class of measures of mobility as an equalizer of longer-term incomes, a concept different from other notions such as mobility as time-independence, positional movement, share movement, income flux, and directional income movement.
Abstract: This paper develops a new class of measures of mobility as an equalizer of longer-term incomes—a concept different from other notions such as mobility as time-independence, positional movement, share movement, income flux, and directional income movement. A number of properties are specified leading to a class of indices, one easily-implementable member of which is applied to data for the USA and France. Using this index, income mobility is found to have equalized longer-term earnings among US men in the 1970s but not in the 1980s or 1990s. In France, though, income mobility was equalizing throughout, and it has attained its maximum in the most recent period.
150 citations