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On the characterisation and measurement of the welfare effects of income mobility from an ex-ante perspective

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  • Paul Allanson

Abstract

The paper employs a rank-dependent formulation of the social welfare function with time-separable utilities to evaluate the economic consequences of income mobility from an ex-ante perspective. The resultant class of measures can be decomposed not only in terms of structural and exchange mobility but also in terms of vertical and horizontal mobility, thereby encompassing two of the main approaches in the literature. We illustrate our measurement framework by comparing mobility in the USA and Germany using data from the Cross-National Equivalent File 1980-2005. We find that the pattern of income mobility in the USA was both less pro-poor and more horizontally inequitable than in Germany, but that the latter did not translate into higher levels of exchange mobility given higher levels of absolute inequality and the vertical stance of the growth process.

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File URL: http://www.dundee.ac.uk/media/dundeewebsite/economicstudies/documents/discussion/DDPE_219.pdf
File Function: First version, 2008
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Bibliographic Info

Paper provided by Economic Studies, University of Dundee in its series Dundee Discussion Papers in Economics with number 219.

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Length: 27 pages
Date of creation: Sep 2008
Date of revision:
Handle: RePEc:dun:dpaper:219

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Keywords: income mobility; ex-ante welfare analysis; USA; Germany;

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References

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  20. 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.
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Cited by:
  1. Nicholas Rohde & Kam Ki Tang & Prasada Rao, 2010. "Income Inequality, Mobility And Economic Insecurity In Australia," Discussion Papers Series 407, School of Economics, University of Queensland, Australia.
  2. Nicholas Rohde & Kam Ki Tang & Prasada Rao, 2011. "Income volatility and insecurity in the U.S., Germany and Britain," Discussion Papers Series 434, School of Economics, University of Queensland, Australia.

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