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Consumption Mobility in the United States: Evidence from Two Panel Data Sets

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  • Fisher Jonathan D

    ()
    (Litigation Analytics, Inc.)

  • Johnson David S

    ()
    (U.S. Census Bureau)

Abstract

This paper examines inequality and mobility using measures of income and consumption. Consumption is claimed to be a better measure of permanent income and thus well-being, but most studies of inequality and mobility using U.S. data use income.This paper uses cohort data from the Consumer Expenditure Surveys on total consumption to impute consumption in the Panel Study of Income Dynamics. Then, we use this imputed consumption and actual income from the PSID to examine changes in inequality and mobility. Similar to earlier findings, we show that there has been a large increase in income inequality but no concurrent increase in consumption inequality in the 1990s. Conversely, income mobility and consumption mobility are similar during this time period.Finally, we link the concepts of inequality and mobility using a social welfare function. The results suggest that income mobility and consumption mobility more than offset the increases in inequality.

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File URL: http://www.degruyter.com/view/j/bejeap.2006.6.1/bejeap.2006.6.1.1474/bejeap.2006.6.1.1474.xml?format=INT
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Bibliographic Info

Article provided by De Gruyter in its journal The B.E. Journal of Economic Analysis & Policy.

Volume (Year): 6 (2006)
Issue (Month): 1 (September)
Pages: 1-38

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Handle: RePEc:bpj:bejeap:v:topics.6:y:2006:i:1:n:16

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Cited by:
  1. Karen E. Dynan & Douglas W. Elmendorf & Daniel E. Sichel, 2006. "Financial innovation and the Great Moderation: what do household data say?," Proceedings, Federal Reserve Bank of San Francisco, issue Nov.
  2. Till van Treeck, 2012. "Did inequality cause the U.S. financial crisis?," IMK Working Paper 91-2012, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.
  3. Jones, Carol Adaire & Milkove, Daniel & Paszkiewicz, Laura, 2010. "Farm Household Well-Being: Comparing Consumption- and Income-Based Measures," Economic Research Report 58299, United States Department of Agriculture, Economic Research Service.
  4. Dirk Krueger & Jesus Fernandez-Villaverde, 2004. "Consumption over the Life Cycle: Some Facts from Consumer Expenditure Survey Data," 2004 Meeting Papers 173, Society for Economic Dynamics.
  5. Anderberg, Dan, 2007. "Self-enforcing exchange among generations: Implications for consumption and mobility," European Economic Review, Elsevier, vol. 51(7), pages 1813-1827, October.
  6. Kerwin Kofi Charles & Sheldon Danziger & Geng Li & Robert F. Schoeni, 2006. "Studying consumption with the Panel Study of Income Dynamics: comparisons with the Consumer Expenditure Survey and an application to the intergenerational transmission of well-being," Finance and Economics Discussion Series 2007-16, Board of Governors of the Federal Reserve System (U.S.).
  7. Greg Kaplan & Giovanni L. Violante, 2010. "How Much Consumption Insurance beyond Self-Insurance?," American Economic Journal: Macroeconomics, American Economic Association, vol. 2(4), pages 53-87, October.
  8. Jones, Carol Adaire & Milkove, Daniel & Paszkiewicz, Laura, 2009. "Measuring Farm Household Well-Being: Comparing Consumption and Income-based Measures," 2009 Annual Meeting, July 26-28, 2009, Milwaukee, Wisconsin 49355, Agricultural and Applied Economics Association.
  9. Jonathan Heathcote & Kjetil Storesletten & Giovanni L. Violante, 2009. "Quantitative Macroeconomics with Heterogeneous Households," Annual Review of Economics, Annual Reviews, vol. 1(1), pages 319-354, 05.
  10. Guo, Sheng, 2010. "The superior measure of PSID consumption: An update," Economics Letters, Elsevier, vol. 108(3), pages 253-256, September.
  11. Athreya, Kartik & Tam, Xuan S. & Young, Eric R., 2009. "Unsecured credit markets are not insurance markets," Journal of Monetary Economics, Elsevier, vol. 56(1), pages 83-103, January.
  12. Jesus Fernández-Villaverde & Dirk Krueger, 2007. "Consumption over the Life Cycle: Facts from Consumer Expenditure Survey Data," The Review of Economics and Statistics, MIT Press, vol. 89(3), pages 552-565, August.
  13. E. Schechtman & S. Yitzhaki, 2003. "A Family of Correlation Coefficients Based on the Extended Gini Index," Journal of Economic Inequality, Springer, vol. 1(2), pages 129-146, August.
  14. Tirelli Mario & Turner Sergio, 2010. "Quantifying the Cost of Risk in Consumption," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 10(1), pages 1-33, July.

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