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 and apply a general framework for evaluating long-term income distributions according to the equality of opportunity principle, which allows for both an exante and an ex-post approach to EOP.
Abstract: In this paper, we introduce and apply a general framework for evaluating long-term income distributions according to the Equality of Opportunity principle. Our framework allows for both an ex-ante and an ex-post approach to EOp. Our ex-post approach relies on a permanent income measure defined as the minimum annual expenditure an individual would need in order to be as well off as he could be by undertaking inter-period income transfers. There is long-term ex-post inequality of opportunity if individuals who exert the same effort have different permanent incomes. In comparison, the ex-ante approach focuses on the expected permanent income for individuals with identical circumstances. Hence, the ex-ante approach pays attention to inequalities in expected permanent income between different types of individuals. To demonstrate the empirical relevance of a long-run perspective on EOp, we exploit a unique panel data from Norway on individuals' incomes over their working lifespan.
100 citations
Cites background from "Income inequality and income mobili..."
...1 See e.g. Shorrocks (1978), Chakravarty et al. (1985), Maasoumi and Trede (2001), and Aaberge and Mogstad (2009)....
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...In Shorrocks (1978) as well as in most subsequent empirical studies of long-term inequality and income mobility according to the EOp principle, the average income is used as an approximation for permanent income....
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...…others, Bourguignon et al. 2003, Checchi and Peragine 2009, Dardanoni et al. 2006, Ferreira and Guignoux 2008, Lefranc et al. 2006a,b, Peragine 2002, 2004, Peragine and Serlenga 2008), has explored two main approaches to measure opportunity inequality, namely the ex-ante and the ex-post approach4....
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TL;DR: In this paper, a model of earnings dynamics that combines a flexible specification of marginal earnings distributions (to fit the large cross-sectional dimension of the data) with a tight parametric representation of the dynamics (adapted to the short time-series dimension).
Abstract: In this paper, we document whether and how much the equalizing force of earnings mobility has changed in France in the 1990’s. For this purpose, we use a representative three-year panel, the French Labour Force Survey. We develop a model of earnings dynamics that combines a flexible specification of marginal earnings distributions (to fit the large cross-sectional dimension of the data) with a tight parametric representation of the dynamics (adapted to the short time-series dimension). Log earnings are modelled as the sum of a deterministic component, an individual fixed effect and a transitory component which is assumed first-order Markov. The transition probability of the transitory component is modelled as a one-parameter Plackett copula. We estimate this model using a sequential expectation-maximization algorithm. We exploit the estimated model to study employment/earnings inequality in France over the 1990– 2002 period. We show that, in phase with business-cycle fluctuations (a recession in 1993 and two peaks in 1990 and 2000), earnings mobility decreases when cross-section inequality and unemployment risk increase. We simulate individual earnings trajectories and compute present values of lifetime earnings for various horizons. Inequality presents a hump-shaped evolution over the period, with a 9% increase between 1990 and 1995 and a decrease afterwards. Accounting for unemployment yields an increase of 11%. Moreover, this increase is persistent, as it translates into a 12% increase in the variance of log present values. The ratio of inequality in present values to inequality in one-year earnings, a natural measure of immobility or of the persistence of inequality, remains remarkably constant over the business cycle.
99 citations
TL;DR: The model of modern fame has been conceptualized as an open system in which people continually move in and out of celebrity status as mentioned in this paper, which stands in stark contrast to the traditional not...
Abstract: Contemporary scholarship has conceptualized modern fame as an open system in which people continually move in and out of celebrity status. This model stands in stark contrast to the traditional not...
89 citations
TL;DR: This article used a two-sample instrumental variables approach to estimate a time series of intergenerational economic mobility using the decennial U.S. Censuses and found that the inter-generational income elasticity (IGE) followed a roughly U-shaped pattern from 1940 to 2000 that is similar to well known cross-sectional inequality trends.
Abstract: We use a two-sample instrumental variables approach to estimate a time series of intergenerational economic mobility using the decennial U.S. Censuses. We find that the intergenerational income elasticity (IGE) followed a roughly U-shaped pattern from 1940 to 2000 that is similar to well known cross-sectional inequality trends. In particular, we find that intergenerational mobility (measured as 1 minus the IGE) increased from 1940 to 1980 but has declined sharply since 1980. The decline after 1980 is robust to alternative estimation approaches. This suggests that the rate of regression to the mean has been notably lower during the 1980s and 1990s compared to the three decades after WWII. Historical trends in the returns to education can only account for some of these changes in the IGE. The time pattern and the changes across birth cohorts may also help to reconcile previous findings in the literature that have used different surveys. Our estimates imply a somewhat different pattern for the intergenerational income correlation, a measure which is insensitive to changes in cross-sectional inequality and has implications for rank or positional mobility. We find that the post-1980 decline in intergenerational rank mobility marks a return to typical historical levels. At the end of the 20th century, the rate of movement of families across the income distribution across generations appears historically normal, but, as cross-sectional inequality has increased, earnings are regressing to the mean at a much slower rate, causing economic differences between families to persist longer than they had earlier in the century.
81 citations
TL;DR: In this paper, the authors used longitudinal income data from the Panel Study of Income Dynamics and the European Community Household Panel to reassess the received empirical evidence and found that the United States still exhibits the highest level of permanent income inequality in this particular sample of industrial countries.
Abstract: As income mobility over time serves to offset income inequality existing at any point in time, cross-national differences in social stratification are preferably assessed from data on average incomes over an extended period of time. Hence, this article uses longitudinal income data from the Panel Study of Income Dynamics and the European Community Household Panel to reassess the received empirical evidence. Even discounting the impact of income mobility, however, the United States continues to exhibit the highest level of permanent income inequality in this particular sample of industrial countries. In addition, older workers and individuals at the bottom of the income distribution have faced significantly worse income prospects than common in many European countries.
77 citations
Cites background or methods from "Income inequality and income mobili..."
...This measure of the persistence of income inequalities, also known as Shorrocks’s R (cf. Shorrocks, 1978), is then given as: R I Y T I YM t t T t= ≤ = ∑( ) ( )µ µ 1 1 (4) that is, as the ratio of inequality of multiperiod (or average) incomes YM to the weighted average of inequality for…...
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...In fact, whenever income mobility is sufficiently strong, high levels of cross-sectional income inequality may actually be a rather poor indicator of persistent inequality of incomes, because income mobility over time will tend to equalize individuals’ longrun (or permanent) incomes (e.g., Buchinsky & Hunt, 1999; Flinn, 2002; Gittleman & Joyce, 1999; Shorrocks, 1978)....
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...…cross-sectional income inequality may actually be a rather poor indicator of persistent inequality of incomes, because income mobility over time will tend to equalize individuals’ longrun (or permanent) incomes (e.g., Buchinsky & Hunt, 1999; Flinn, 2002; Gittleman & Joyce, 1999; Shorrocks, 1978)....
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...…at any given point in time that, by including a component of transitory income gains or losses that become equalized between households and individuals over time, may actually constitute an artificially inflated measure of the inequality of typical standards of living (e.g., Shorrocks, 1978)....
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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