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What Lies Behind Income Mobility? Reranking and Distributional Change in Belgium, Western Germany and the USA

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Philippe Van Kerm

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Abstract

The paper presents a decomposition of income mobility indices into two basic sources: mobility induced by a change of the income distribution shape, and mobility induced by a reordering of individuals in the income pecking order. The decomposition procedure, based on counterfactual distributions, results in a decomposition that is applicable to a broad class of mobility measures. Application to income 'movement' indices with data for Belgium, Western Germany and the USA indicates that reranking has been the major force behind income mobility. Copyright (c) The London School of Economics and Political Science 2004.

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Article provided by London School of Economics and Political Science in its journal Economica.

Volume (Year): 71 (2004)
Issue (Month): 281 (05)
Pages: 223-239
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Handle: RePEc:bla:econom:v:71:y:2004:i:281:p:223-239

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Mervyn A. King, 1983. "An Index of Inequality: With Applications to Horizontal Equity and Social Mobility," NBER Working Papers 0468, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  2. Javier Ruiz-Castillo, 2004. "The measurement of structural and exchange income mobility," Journal of Economic Inequality, Springer, vol. 2(3), pages 219-228, September. [Downloadable!] (restricted)
  3. Richard V. Burkhauser & John G. Poupore, 1997. "A Cross-National Comparison Of Permanent Inequality In The United States And Germany," The Review of Economics and Statistics, MIT Press, vol. 79(1), pages 10-17, February. [Downloadable!] (restricted)
  4. Swan, Trevor W, 2002. "Economic Growth," The Economic Record, The Economic Society of Australia, vol. 78(243), pages 375-80, December. [Downloadable!] (restricted)
  5. Cowell, Frank A, 1985. "Measures of Distributional Change: An Axiomatic Approach," Review of Economic Studies, Blackwell Publishing, vol. 52(1), pages 135-51, January. [Downloadable!] (restricted)
  6. Esfandiar Maasoumi & Mark Trede, 2001. "Comparing Income Mobility In Germany And The United States Using Generalized Entropy Mobility Measures," The Review of Economics and Statistics, MIT Press, vol. 83(3), pages 551-559, August. [Downloadable!] (restricted)
  7. Markandya, Anil, 1984. "The Welfare Measurement of Changes in Economic Mobility," Economica, London School of Economics and Political Science, vol. 51(204), pages 457-71, November. [Downloadable!] (restricted)
  8. Fields, Gary S & Ok, Efe A, 1999. "Measuring Movement of Incomes," Economica, London School of Economics and Political Science, vol. 66(264), pages 455-71, November. [Downloadable!] (restricted)
  9. Fields, Gary S. & Ok, Efe A., 1996. "The Meaning and Measurement of Income Mobility," Journal of Economic Theory, Elsevier, vol. 71(2), pages 349-377, November. [Downloadable!] (restricted)
  10. Chantreuil, F. & Trannoy, A., 1999. "Inequality Decomposition Values: the Trade-Off Between Marginality and Consistency," Papers 99-24, Paris X - Nanterre, U.F.R. de Sc. Ec. Gest. Maths Infor..
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  11. King, Mervyn A, 1983. "An Index of Inequality: With Applications to Horizontal Equity and Social Mobility," Econometrica, Econometric Society, vol. 51(1), pages 99-115, January. [Downloadable!] (restricted)
  12. Fields, Gary S. & Ok, Efe A., 1996. "The Measurement of Income Mobility: An Introduction to the Literature," Working Papers 96-05, C.V. Starr Center for Applied Economics, New York University. [Downloadable!]
  13. Markandya, A, 1982. "The Measurement of Earnings Mobility among Occupational Groups," Scottish Journal of Political Economy, Scottish Economic Society, vol. 29(1), pages 75-88, February.
  14. Dardanoni Valentino, 1993. "Measuring Social Mobility," Journal of Economic Theory, Elsevier, vol. 61(2), pages 372-394, December. [Downloadable!] (restricted)
  15. Shorrocks, Anthony, 1978. "Income inequality and income mobility," Journal of Economic Theory, Elsevier, vol. 19(2), pages 376-393, December. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Gert G. Wagner & Joachim R. Frick & Jürgen Schupp, 2006. "Enhancing the Power of Household Panel Studies: The Case of the German Socio-Economic Panel Study (SOEP) ; Paper Prepared for the StatCan-Conference "Longitudinal Social Surveys in an Internation," Data Documentation 13, DIW Berlin, German Institute for Economic Research. [Downloadable!]
  2. Wagstaff, Adam, 2005. "Decomposing changes in income inequality into vertical and horizontal redistribution and reranking, with applications to China and Vietnam," Policy Research Working Paper Series 3559, The World Bank. [Downloadable!]
  3. Van Kerm, Philippe, 2006. "Comparisons of income mobility profiles," IRISS Working Paper Series 2006-03, IRISS at CEPS/INSTEAD. [Downloadable!]
  4. Paul Makdissi & Stéphane Mussard, 2006. "Between-Group Transfers and Poverty-Reducing Tax Reforms," Cahiers de recherche 0642, CIRPEE. [Downloadable!]
    Other versions:
  5. Stephen P. Jenkins & Philippe VanKerm, 2003. "Trends in Income Inequality, Pro-Poor Income Growth and Income Mobility," Discussion Papers of DIW Berlin 377, DIW Berlin, German Institute for Economic Research. [Downloadable!]
    Other versions:
  6. Luis Ayala & Mercedes Sastre, 2002. "La medición de la movilidad de ingresos: enfoques e indicadores," Hacienda Pública Española, IEF, vol. 162(3), pages 101-131, September. [Downloadable!]
  7. Paul Allanson, 2008. "On the characterisation and measurement of the welfare effects of income mobility from an ex-ante perspective," Discussion Papers 219, University of Dundee, Economic Studies. [Downloadable!]
  8. Stéphane Bonhomme & Jean-Marc Robin, 2008. "Assessing the equalizing force of mobility using short panels: France 1990-2000," CeMMAP working papers CWP02/08, Centre for Microdata Methods and Practice, Institute for Fiscal Studies. [Downloadable!]
    Other versions:
  9. Luis Ayala & Mercedes Sastre, 2008. "The structure of income mobility: empirical evidence from five UE countries," Empirical Economics, Springer, vol. 35(3), pages 451-473, November. [Downloadable!] (restricted)
  10. repec:ese:iserwp: is not listed on IDEAS
  11. Shuang LI & Ming LU & Hiroshi Sato, 2008. "The Value of Power in China: How Do Party Membership and Social Networks Affect Pay in Different Ownership Sectors?," Global COE Hi-Stat Discussion Paper Series gd08-011, Institute of Economic Research, Hitotsubashi University. [Downloadable!]
  12. Ayala, L. & Sastre, M., 2002. "Europe vs. The United States: Is There a Trade-Off Between Mobility and Inequality?," European Economy Group Working Papers 19, European Economy Group. [Downloadable!]
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