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Earnings Mobility in Argentina, Mexico, and Venezuela: Testing the Divergence of Earnings and the Symmetry of Mobility Hypotheses

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Author Info

  • Fields, Gary S.

    ()
    (Cornell University)

  • Duval Hernández, Robert

    ()
    (CIDE, Mexico City)

  • Freije-Rodriguez, Samuel

    ()
    (World Bank)

  • Sanchez Puerta, Maria Laura

    ()
    (World Bank)

Abstract

This paper examines changes in individual earnings during positive and negative growth periods in three Latin American economies: Argentina, Mexico, and Venezuela. We ask whether those individuals who start in the best economic position are those who experience the largest earnings gains or the smallest earnings losses; this is the “divergent mobility” hypothesis. We also compare periods of positive economic growth with those of negative economic growth, asking whether those groups of individuals that experience large positive earnings gains when the economy is growing are the same as those that experience large earnings losses when the economy is contracting; this is the “symmetry of mobility” hypothesis. We find very occasional support for the divergent mobility hypothesis in scattered years in the cases of Mexico and Venezuela, and no support at all in the case of Argentina. Rather, earnings mobility is most frequently convergent or neutral in all three countries. As for the symmetry of mobility hypothesis, we find that it is rejected in most cases; rather, those groups that gain the most when the economy is growing are also the ones that gain the most when the economy is contracting. Furthermore, we explain how the absence of divergence is compatible with rising inequality in the countries under study.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 3184.

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Length: 40 pages
Date of creation: Nov 2007
Date of revision:
Handle: RePEc:iza:izadps:dp3184

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Keywords: earnings mobility; income convergence; Latin America;

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References

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  1. Michael Carter & Christopher Barrett, 2006. "The economics of poverty traps and persistent poverty: An asset-based approach," Journal of Development Studies, Taylor & Francis Journals, vol. 42(2), pages 178-199.
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Cited by:
  1. Viviane Azevedo & Cesar Bouillon, 2009. "Social Mobility in Latin America: A Review of Existing Evidence," Research Department Publications 4634, Inter-American Development Bank, Research Department.
  2. Dang, Hai-Anh & Lanjouw, Peter & Luoto, Jill & McKenzie, David, 2014. "Using repeated cross-sections to explore movements into and out of poverty," Journal of Development Economics, Elsevier, vol. 107(C), pages 112-128.
  3. Khor, Niny & Pencavel, John, 2006. "Income Mobility of Individuals in China and the United States," IZA Discussion Papers 2003, Institute for the Study of Labor (IZA).
  4. Fields, Gary S. & Sánchez Puerta, María Laura, 2010. "Earnings Mobility in Times of Growth and Decline: Argentina from 1996 to 2003," World Development, Elsevier, vol. 38(6), pages 870-880, June.
  5. Walter Sosa-Escudero & Mariana Marchionni & Omar Arias, 2006. "Sources of Income Persistence: Evidence from Rural El Salvador," CEDLAS, Working Papers 0037, CEDLAS, Universidad Nacional de La Plata.
  6. Lisa M. Dragoset & Gary S. Fields, 2006. "U.S. Earnings Mobility: Comparing Survey-Based and Administrative-Based Estimates," Working Papers 55, ECINEQ, Society for the Study of Economic Inequality.

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