This file is part of IDEAS, which uses RePEc data


[ Papers | Articles | Software | Books | Chapters | Authors | Institutions | JEL Classification | NEP reports | Search | New papers by email | Author registration | Rankings | Volunteers | FAQ | Blog | Help! ]

On the Measurement of Long-Term Income Inequality and Income Mobility

Author info | Abstract | Publisher info | Download info | Related research | Statistics
Author Info
Rolf Aaberge ()
Magne Mogstad ()

Additional information is available for the following registered author(s):

Abstract

This paper proposes a two-step aggregation method for measuring long-term income inequality and income mobility, where mobility is defined as an equalizer of long-term income. First, the income stream of each individual is aggregated into a measure of permanent income, which accounts for the costs associated with income fluctuations. Consequently, mobility will have an unambiguously positive impact on social welfare in the sense that for two societies that have identical short term income distributions, the social welfare will be greatest for the socie ty which exhibits most mobility. The second step consists of aggregating permanent incomes across individuals into measures of social welfare, inequality and mobility. To this end, we employ an axiomatic approach to justify the introduction of a generalized family of rank-dependent measures of inequality, where the distributional weights, as opposed to the Mehran-Yaari family, depend on income shares as well as on population shares. Moreover, a subfamily is shown to be associated with social welfare functions that have intuitively appealing interpretatio ns. Further, the generalized family of inequality measures provides several new interpretations of the Gini-coefficient. The proposed family of income mobility also proves to encompass standard measures of income mobility, depending on the assumptions made about the interpersonal preferences and the credit market.

Download Info
To download:

If you experience problems downloading a file, check if you have the proper application to view it first. Information about this may be contained in the File-Format links below. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://www.icer.it/docs/wp2009/ICERwp09-09.pdf
File Format: application/pdf
File Function:
Download Restriction: no

Publisher Info
Paper provided by ICER - International Centre for Economic Research in its series ICER Working Papers with number 09-2009.

Download reference. The following formats are available: HTML (with abstract), plain text (with abstract), BibTeX, RIS (EndNote, RefMan, ProCite), ReDIF
Length: 34 pages
Date of creation: May 2009
Date of revision:
Handle: RePEc:icr:wpicer:09-2009

Contact details of provider:
Postal: Viale Settimio Severo, 63 - 10133 Torino - Italy
Phone: +39 011 6604828
Fax: +39 011 6600082
Email:
Web page: http://www.icer.it
More information through EDIRC

For technical questions regarding this item, or to correct its listing, contact: (Alessandra Calosso).

Related research
Keywords: Income inequality; income mobility; social welfare; the Gini coefficient; permanent income; annuity.;

Find related papers by JEL classification:
D71 - Microeconomics - - Analysis of Collective Decision-Making - - - Social Choice; Clubs; Committees; Associations
D91 - Microeconomics - - Intertemporal Choice and Growth - - - Intertemporal Consumer Choice; Life Cycle Models and Saving
I32 - Health, Education, and Welfare - - Welfare and Poverty - - - Measurement and Analysis of Poverty

This paper has been announced in the following NEP Reports:

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. Green, Jerry R & Jullien, Bruno, 1988. " Ordinal Independence in Nonlinear Utility Theory," Journal of Risk and Uncertainty, Springer, vol. 1(4), pages 355-87, December.
    Other versions:
  2. Gustafsson, Bjorn, 1994. "The Degree and Pattern of Income Immobility in Sweden," Review of Income and Wealth, Blackwell Publishing, vol. 40(1), pages 67-86, March.
  3. Kolm, Serge-Christophe, 1976. "Unequal inequalities. II," Journal of Economic Theory, Elsevier, vol. 13(1), pages 82-111, August. [Downloadable!] (restricted)
  4. Porath Elchanan Ben & Gilboa Itzhak, 1994. "Linear Measures, the Gini Index, and The Income-Equality Trade-off," Journal of Economic Theory, Elsevier, vol. 64(2), pages 443-467, December. [Downloadable!] (restricted)
    Other versions:
  5. 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)
  6. Roland Benabou & Efe A. Ok, 2001. "Mobility as Progressivity: Ranking Income Processes According to Equality of Opportunity," NBER Working Papers 8431, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  7. Weymark, John A., 1981. "Generalized gini inequality indices," Mathematical Social Sciences, Elsevier, vol. 1(4), pages 409-430, August. [Downloadable!] (restricted)
  8. Fields, Gary S & Fei, John C H, 1978. "On Inequality Comparisons," Econometrica, Econometric Society, vol. 46(2), pages 303-16, March. [Downloadable!] (restricted)
  9. Gottschalk, Peter & Spolaore, Enricco, 2002. "On the Evaluation of Economic Mobility," Review of Economic Studies, Blackwell Publishing, vol. 69(1), pages 191-208, January.
    Other versions:
  10. Davies, James B. & Shorrocks, Anthony F., 2000. "The distribution of wealth," Handbook of Income Distribution, in: A.B. Atkinson & F. Bourguignon (ed.), Handbook of Income Distribution, edition 1, volume 1, chapter 11, pages 605-675 Elsevier. [Downloadable!] (restricted)
  11. Mehran, Farhad, 1976. "Linear Measures of Income Inequality," Econometrica, Econometric Society, vol. 44(4), pages 805-09, July. [Downloadable!] (restricted)
  12. 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)
  13. Kolm, Serge-Christophe, 1976. "Unequal inequalities. I," Journal of Economic Theory, Elsevier, vol. 12(3), pages 416-442, June. [Downloadable!] (restricted)
  14. Costas Meghir, 2004. "A Retrospective on Friedman's Theory of Permanent Income," Economic Journal, Royal Economic Society, vol. 114(496), pages F293-F306, 06. [Downloadable!] (restricted)
    Other versions:
  15. Kahneman, Daniel & Wakker, Peter P & Sarin, Rakesh, 1997. "Back to Bentham? Explorations of Experienced Utility," The Quarterly Journal of Economics, MIT Press, vol. 112(2), pages 375-405, May.
  16. Donaldson, David & Weymark, John A., 1980. "A single-parameter generalization of the Gini indices of inequality," Journal of Economic Theory, Elsevier, vol. 22(1), pages 67-86, February. [Downloadable!] (restricted)
  17. Ebert, Udo, 1987. "Size and distribution of incomes as determinants of social welfare," Journal of Economic Theory, Elsevier, vol. 41(1), pages 23-33, February. [Downloadable!] (restricted)
  18. Rolf Aaberge & Ugo Colombino & Steinar Strøm, 2004. "Do more equal slices shrink the cake? An empirical investigation of tax-transfer reform proposals in Italy," Journal of Population Economics, Springer, vol. 17(4), pages 767-785, December. [Downloadable!] (restricted)
    Other versions:
  19. Nordhaus, William D, 1973. "The Effects of Inflation on the Distribution of Economic Welfare," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 5(1), pages 465-504, Part II F. [Downloadable!] (restricted)
    Other versions:
  20. Yaari, Menahem E, 1987. "The Dual Theory of Choice under Risk," Econometrica, Econometric Society, vol. 55(1), pages 95-115, January. [Downloadable!] (restricted)
  21. King, Mervyn A., 1983. "Welfare analysis of tax reforms using household data," Journal of Public Economics, Elsevier, vol. 21(2), pages 183-214, July. [Downloadable!] (restricted)
  22. Maasoumi, Esfandiar & Zandvakili, Sourushe, 1986. "A class of generalized measures of mobility with applications," Economics Letters, Elsevier, vol. 22(1), pages 97-102. [Downloadable!] (restricted)
  23. Maasoumi, Esfandiar & Zandvakili, Sourushe, 1990. "Generalized entropy measures of mobility for different sexes and income levels," Journal of Econometrics, Elsevier, vol. 43(1-2), pages 121-133. [Downloadable!] (restricted)
  24. Shorrocks, Anthony, 1978. "Income inequality and income mobility," Journal of Economic Theory, Elsevier, vol. 19(2), pages 376-393, December. [Downloadable!] (restricted)
  25. Rothschild, Michael & Stiglitz, Joseph E., 1970. "Increasing risk: I. A definition," Journal of Economic Theory, Elsevier, vol. 2(3), pages 225-243, September. [Downloadable!] (restricted)
  26. Atkinson, Anthony B., 1970. "On the measurement of inequality," Journal of Economic Theory, Elsevier, vol. 2(3), pages 244-263, September. [Downloadable!] (restricted)
  27. Segal, Uzi, 1990. "Two-Stage Lotteries without the Reduction Axiom," Econometrica, Econometric Society, vol. 58(2), pages 349-77, March. [Downloadable!] (restricted)
    Other versions:
  28. Donaldson, David & Weymark, John A., 1983. "Ethically flexible gini indices for income distributions in the continuum," Journal of Economic Theory, Elsevier, vol. 29(2), pages 353-358, April. [Downloadable!] (restricted)
  29. Yaari, Menahem E., 1988. "A controversial proposal concerning inequality measurement," Journal of Economic Theory, Elsevier, vol. 44(2), pages 381-397, April. [Downloadable!] (restricted)
Full references

Statistics
Access and download statistics

Did you know? The RePEc project started in 1997. Its precursor, NetEc, dates back to 1993.

This page was last updated on 2009-11-18.

This information is provided to you by IDEAS at the Department of Economics, College of Liberal Arts and Sciences, University of Connecticut using RePEc data on a server sponsored by the Society for Economic Dynamics.