Introducing Unobserved Heterogeneity in Earnings Mobility
AbstractThis paper introduces and describes unobserved heterogeneity in earnings quintiles transition matrices in the US. Unobserved heterogeneity is found to play a crucial role in earnings mobility. Each individual is attracted, given his characteristics, towards a specific zone of the distribution. At the stationnary equilibrium, the earnings quintiles distribution is thus segmented. Interestingly, while the level of earnings mobility has remained quite stable since 1970, the width of these zones has decreased, such that this segmentation was more pronounced in the 80's and the 90's than in the 70's, especially in the middle of the quintiles distribution.
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Bibliographic InfoPaper provided by HAL in its series Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) with number halshs-00250130.
Date of creation: 09 Nov 2007
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earnings mobility; unobserved heterogeneity; segmentation; state dependence; dynamic multinomial logit;
Other versions of this item:
- Thibault Brodaty, 2007. "Introducing Unobserved Heterogeneity in Earnings Mobility," Working Papers 2007-35, Centre de Recherche en Economie et Statistique.
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