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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.

Suggested Citation

  • Markandya, Anil, 1982. "Intergenerational exchange mobility and economic welfare," European Economic Review, Elsevier, vol. 17(3), pages 307-324.
  • Handle: RePEc:eee:eecrev:v:17:y:1982:i:3:p:307-324
    DOI: 10.1016/S0014-2921(82)80066-4
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    References listed on IDEAS

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    1. Shorrocks, A F, 1978. "The Measurement of Mobility," Econometrica, Econometric Society, vol. 46(5), pages 1013-1024, September.
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    Cited by:

    1. Ambra Poggi & Jacques Silber, 2010. "On Polarization And Mobility: A Look At Polarization In The Wage-Career Profile In Italy," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 56(1), pages 123-140, March.
    2. 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.
    3. Tom Krebs & Pravin Krishna & William Maloney, 2013. "Income Mobility and Welfare," IMF Working Papers 13/24, International Monetary Fund.
    4. Ayala, Luis & Sastre, Mercedes, 2002. "What determines income mobility differences across the European Union?," ISER Working Paper Series 2002-27, Institute for Social and Economic Research.
    5. Kai-yuen Tsui, 2009. "Measurement of income mobility: a re-examination," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 33(4), pages 629-645, November.
    6. 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, June.
    7. Yoram Amiel & Michele Bernasconi & Frank Cowell & Valentino Dardanoni, 2015. "Do we value mobility?," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 44(2), pages 231-255, February.
    8. Satya R. Chakravarty & Nachiketa Chattopadhyay & Nora Lustig & Rodrigo Aranda Balcazar, 2017. "Measuring Directional Mobility: The Bartholomew and Prais-Bibby Indices Reconsidered," Working Papers 1720, Tulane University, Department of Economics.
    9. 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.
    10. Peter Gottschalk & Enrico Spolaore, 2002. "On the Evaluation of Economic Mobility," Review of Economic Studies, Oxford University Press, vol. 69(1), pages 191-208.
    11. Antonio Abatemarco, 2016. "Evaluating economic mobility under opportunity egalitarianism," Working Papers 396, ECINEQ, Society for the Study of Economic Inequality.
    12. Luis Ayala & Mercedes Sastre, 2004. "Europe vs. the United States: is there a trade-off between mobility and inequality?," Journal of Income Distribution, Journal of Income Distribution, vol. 13(1-2), pages 4-4, March-Jun.
    13. Modai-Snir, Tal & van Ham, Maarten, 2017. "Structural and Exchange Components in Processes of Neighbourhood Change: A Social Mobility Approach," IZA Discussion Papers 10695, Institute for the Study of Labor (IZA).
    14. 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.
    15. Ruiz-Castillo, Javier, 1997. "Income mobility, permutations, and rerankings," UC3M Working papers. Economics 6070, Universidad Carlos III de Madrid. Departamento de Economía.
    16. Javier Ruiz-Castillo, 2004. "The measurement of structural and exchange income mobility," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 2(3), pages 219-228, September.
    17. Raquel Carrasco & Javier Ruiz-Castillo, 2014. "The Evolution Of The Scientific Productivity Of Highly Productive Economists," Economic Inquiry, Western Economic Association International, vol. 52(1), pages 1-16, January.
    18. Leonardo Bonilla, 2010. "Movilidad intergeneracional en educación en las ciudades," REVISTA DE ECONOMÍA DEL ROSARIO, UNIVERSIDAD DEL ROSARIO, November.
    19. 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.
    20. Joachim Jarreau, 2015. "The Impact of Naturalizations on Job Mobility and Wages: Evidence from France," Working Papers halshs-01117449, HAL.

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