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Intragenerational mobility and the ratio of permanent to total inequality

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  • Gulgun Bayaz-Ozturk
  • Tao Chen
  • Kenneth A. Couch

Abstract

This article provides finite sample conditions for the ratio of permanent to total inequality based on methods of Gottschalk and Moffitt (1994) to be equivalent to the Shorrocks R constructed with a Theil General Entropy Index. A simple test emerges of whether the two measures can be seen as equivalent that reveals the implicit social weighting placed on different parts of the income distribution by the Gottschalk-Moffitt methods. Using data from the PSID and the SOEP for annual income from 1984 through 2006, the condition for the two measures to be equivalent is found to be satisfied in both data sets.

Suggested Citation

  • Gulgun Bayaz-Ozturk & Tao Chen & Kenneth A. Couch, 2014. "Intragenerational mobility and the ratio of permanent to total inequality," Applied Economics, Taylor & Francis Journals, vol. 46(36), pages 4399-4408, December.
    • Handle: RePEc:taf:applec:v:46:y:2014:i:36:p:4399-4408
    DOI: 10.1080/00036846.2014.962225
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    References listed on IDEAS

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    1. Peter Gottschalk & Enrico Spolaore, 2002. "On the Evaluation of Economic Mobility," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 69(1), pages 191-208.
    2. Burkhauser, Richard V & Holtz-Eakin, Douglas & Rhody, Stephen E, 1997. "Labor Earnings Mobility and Inequality in the United States and Germany during the Growth Years of the 1980s," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 38(4), pages 775-794, November.
    3. Chen, Tao & Couch, Kenneth A., 2013. "Permanent and transitory inequality and intragenerational mobility," Economics Letters, Elsevier, vol. 120(2), pages 200-202.
    4. Richard V. Burkhauser & John G. Poupore, 1997. "A Cross-National Comparison Of Permanent Inequality In The United States And Germany," The Review of Economics and Statistics, MIT Press, vol. 79(1), pages 10-17, February.
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    6. Kenneth A. Couch & Dana W. Placzek, 2010. "Earnings Losses of Displaced Workers Revisited," American Economic Review, American Economic Association, vol. 100(1), pages 572-589, March.
    7. 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.
    8. Shorrocks, Anthony, 1978. "Income inequality and income mobility," Journal of Economic Theory, Elsevier, vol. 19(2), pages 376-393, December.
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    Cited by:

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