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More unequal, but more mobile? Earnings inequality and mobility in OECD countries

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  • Garnero, Andrea
  • Hijzen, Alexander
  • Martin, Sébastien

Abstract

This paper provides comprehensive cross-country evidence on the relationship between earnings inequality and intra-generational mobility by simulating individual earnings and employment trajectories using short panels for 24 OECD countries. On average across countries, only 20% of earnings inequality in a given year evens out over the life cycle as a result of mobility. This suggests that the bulk of earnings inequality at a given time is permanent. Moreover, mobility and inequality are positively correlated across countries, suggesting that international differences in life-time inequality tend to be less pronounced than inequality differences in a given year. The positive correlation is largely driven by employment mobility – movements between employment and unemployment – and most pronounced in the bottom of the distribution.

Suggested Citation

  • Garnero, Andrea & Hijzen, Alexander & Martin, Sébastien, 2019. "More unequal, but more mobile? Earnings inequality and mobility in OECD countries," Labour Economics, Elsevier, vol. 56(C), pages 26-35.
  • Handle: RePEc:eee:labeco:v:56:y:2019:i:c:p:26-35
    DOI: 10.1016/j.labeco.2018.08.005
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    References listed on IDEAS

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    More about this item

    Keywords

    Intra-generational mobility; Life-time inequality; Earnings-experience profiles; Simulation;

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General
    • J62 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Job, Occupational and Intergenerational Mobility; Promotion
    • O57 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Comparative Studies of Countries

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