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Exploring Shorrocks Mobility Indices Using European Data

  • Paul Gregg
  • Claudia Vittori

    ()

Starting from the approach proposed by Schluter and Trede (2003) we develop a continuous and alternative measure of mobility which first, allows to identify mobility over different parts of the earnings distribution and second, to distinguish between mobility that tends to reduce or increase the level of permanent inequality. This paper focuses on four European countries, Denmark, Germany, Spain and the UK. In a global perspective, mobility in the short and long-run analysis tends to equalize the level of permanent inequality. Six year changes comparing the average between 1994 and 1995 with the average of 2000 and 2001, suggests that Denmark has the highest mobility mainly almost entirely from higher mobility at the middle and top of the distribution. Germany has the lowest overall mobility. Overall mobility over six years produces only a modest reduction in inequality patterns (5 to 10%) adopting the Gini index and there is no clear correlation between mobility and inequality levels. Exploiting the decomposability of the mobility index developed, we carry out a local analysis by earnings quintiles which draw some general key facts. It emerges that it is the bottom 20 percent of the earnings distribution that makes the largest contribution to the global mobility pattern and that mobility, with the exception of Denmark, does not lead to clear convergence to the mean but at points around 0.7-0.8 and 1.5 to 2 times the mean.

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Paper provided by Department of Economics, University of Bristol, UK in its series The Centre for Market and Public Organisation with number 08/206.

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Length: 26 pages
Date of creation: Oct 2008
Date of revision:
Handle: RePEc:bri:cmpowp:08/206
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  1. Lee A. Lillard & Robert J. Willis, 1976. "Dynamic Aspects of Earnings Mobility," NBER Working Papers 0150, National Bureau of Economic Research, Inc.
  2. Paul Gregg, 2008. "UK Welfare Reform 1996 to 2008 and beyond: A personalised and responsive welfare system?," The Centre for Market and Public Organisation 08/196, Department of Economics, University of Bristol, UK.
  3. Rolf Aaberge & Anders Björklund & Markus Jäntti & Mårten Palme & Peder J. Pedersen & Nina Smith & Tom Wennemo, 1996. "Income Inequality and Income Mobility in the Scandinavian Countries Compared to the United States," Discussion Papers 168, Research Department of Statistics Norway.
  4. Maasoumi, Esfandiar & Zandvakili, Sourushe, 1986. "A class of generalized measures of mobility with applications," Economics Letters, Elsevier, vol. 22(1), pages 97-102.
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  6. 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.
  7. Richard Dickens & Alan Manning, 2004. "Has the national minimum wage reduced UK wage inequality?," Journal of the Royal Statistical Society Series A, Royal Statistical Society, vol. 167(4), pages 613-626.
  8. Hofer, Helmut & Weber, Andrea, 2002. "Wage mobility in Austria 1986-1996," Labour Economics, Elsevier, vol. 9(4), pages 563-577, September.
  9. Shorrocks, Anthony, 1978. "Income inequality and income mobility," Journal of Economic Theory, Elsevier, vol. 19(2), pages 376-393, December.
  10. Luis Ayala & Mercedes Sastre, 2008. "The structure of income mobility: empirical evidence from five UE countries," Empirical Economics, Springer, vol. 35(3), pages 451-473, November.
  11. 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.
  12. Jarvis, Sarah & Jenkins, Stephen P, 1998. "How Much Income Mobility Is There in Britain?," Economic Journal, Royal Economic Society, vol. 108(447), pages 428-43, March.
  13. Shorrocks, A F, 1978. "The Measurement of Mobility," Econometrica, Econometric Society, vol. 46(5), pages 1013-24, September.
  14. Maasoumi, Esfandiar, 1986. "The Measurement and Decomposition of Multi-dimensional Inequality," Econometrica, Econometric Society, vol. 54(4), pages 991-97, July.
  15. Fields, Gary S. & Ok, Efe A., 1996. "The Meaning and Measurement of Income Mobility," Journal of Economic Theory, Elsevier, vol. 71(2), pages 349-377, November.
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