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Intergenerational exchange mobility and economic welfare

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  • Markandya, Anil

Abstract

The concepts of exchange and structural mobility are introduced and their relationship with the notion of Equality of Opportunity discussed. It is then shown that exchange mobility can have an impact on social welfare when the utility of any one generation is dependent on the consumption levels of overlapping generations. Whether such consumption interrelationships imply a preference for mobility or the reverse depends on whether the marginal utility of current consumption is raised or lowered by an increase in the consumption level of the associated generation. The rest of this paper examines these two cases in the context of a simple two-class family model. The analysis is concerned with the description of the optimal intergenerational behaviour within this framework. In order to be able to say anything substantial, however, it is necessary to impose some restrictions on the structure of the utility function. One restriction which has some appeal and which yields plausible patterns of optimal policy is that intergenerational links through the utility function be not too strong, in a sense that is made specific in the paper. Imposing this condition, one can show how intra-generational equity is affected both by intergenerational considerations and by the inherited past. Where intragenerational transfers involve efficiency losses, a simple tax model is examined. The circumstances under which, starting with no taxes, the tax rates converge are worked out in both the cases where the utility function has a pro as well as an anti-mobility bias.

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Bibliographic Info

Article provided by Elsevier in its journal European Economic Review.

Volume (Year): 17 (1982)
Issue (Month): 3 ()
Pages: 307-324

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Handle: RePEc:eee:eecrev:v:17:y:1982:i:3:p:307-324

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  1. Shorrocks, A F, 1978. "The Measurement of Mobility," Econometrica, Econometric Society, vol. 46(5), pages 1013-24, September.
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Cited by:
  1. Peter Gottschalk & Enrico Spolaore, 2000. "On the Evaluation of Economic Mobility," Boston College Working Papers in Economics 459, Boston College Department of Economics, revised 09 Apr 2001.
  2. Leonardo Bonilla, 2010. "Movilidad intergeneracional en educación en las ciudades," REVISTA DE ECONOMÍA DEL ROSARIO, UNIVERSIDAD DEL ROSARIO.
  3. Dimitris Pavlopoulos & Ruud Muffels & Jeroen Vermunt, 2010. "Wage mobility in Europe. A comparative analysis using restricted multinomial logit regression," Quality & Quantity: International Journal of Methodology, Springer, vol. 44(1), pages 115-129, January.
  4. Krebs, Tom & Krishna, Pravin & Maloney, William F., 2013. "Income Mobility and Welfare," Working Papers 13-02, University of Mannheim, Department of Economics.
  5. C. Schluter & D. Van De Gaer, 2003. "Mobility as distributional difference," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 03/182, Ghent University, Faculty of Economics and Business Administration.
  6. Javier Ruiz-Castillo, 2004. "The measurement of structural and exchange income mobility," Journal of Economic Inequality, Springer, vol. 2(3), pages 219-228, September.
  7. John Creedy & Elin Halvorsen & Thor O. Thoresen, 2013. "Inequality Comparisons In A Multi-Period Framework: The Role Of Alternative Welfare Metrics," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 59(2), pages 235-249, 06.
  8. C. Schluter & D. Van De Gaer, 2008. "Structural Mobility, Exchange Mobility and Subgroup Consistent Mobility Measurement – US–German Mobility Measurements Revisited," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 08/543, Ghent University, Faculty of Economics and Business Administration.
  9. Yoram Amiel & Michele Bernasconi & Michele Bernasconi & Frank A Cowell & Valentino Dardanoni & Valentino Dardanoni, 2013. "Do We Value Mobility?," STICERD - Public Economics Programme Discussion Papers 17, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.
  10. Kai-yuen Tsui, 2009. "Measurement of income mobility: a re-examination," Social Choice and Welfare, Springer, vol. 33(4), pages 629-645, November.
  11. repec:ese:iserwp:2002-26 is not listed on IDEAS
  12. repec:ese:iserwp:2002-27 is not listed on IDEAS
  13. 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.
  14. Jacques Silber & Michal Weber, 2005. "Gini's mean difference and the measurement of absolute mobility," Metron - International Journal of Statistics, Dipartimento di Statistica, Probabilità e Statistiche Applicate - University of Rome, vol. 0(3), pages 471-492.

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