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Exploring Shorrocks Mobility Indices Using European Data

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  • Paul Gregg
  • Claudia Vittori

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Abstract

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.

Suggested Citation

  • Paul Gregg & Claudia Vittori, 2008. "Exploring Shorrocks Mobility Indices Using European Data," The Centre for Market and Public Organisation 08/206, Department of Economics, University of Bristol, UK.
  • Handle: RePEc:bri:cmpowp:08/206
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    File URL: http://www.bristol.ac.uk/cmpo/publications/papers/2008/wp206.pdf
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    References listed on IDEAS

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    1. 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.
    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. Aaberge, Rolf, et al, 2002. "Income Inequality and Income Mobility in the Scandinavian Countries Compared to the United States," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 48(4), pages 443-469, December.
    4. Lillard, Lee A & Willis, Robert J, 1978. "Dynamic Aspects of Earning Mobility," Econometrica, Econometric Society, vol. 46(5), pages 985-1012, September.
    5. 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.
    6. 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.
    7. Hofer, Helmut & Weber, Andrea, 2002. "Wage mobility in Austria 1986-1996," Labour Economics, Elsevier, vol. 9(4), pages 563-577, September.
    8. 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.
    9. Maasoumi, Esfandiar & Zandvakili, Sourushe, 1986. "A class of generalized measures of mobility with applications," Economics Letters, Elsevier, vol. 22(1), pages 97-102.
    10. Maasoumi, Esfandiar, 1986. "The Measurement and Decomposition of Multi-dimensional Inequality," Econometrica, Econometric Society, vol. 54(4), pages 991-997, July.
    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. 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.
    13. Shorrocks, Anthony, 1978. "Income inequality and income mobility," Journal of Economic Theory, Elsevier, vol. 19(2), pages 376-393, December.
    14. Shorrocks, A F, 1978. "The Measurement of Mobility," Econometrica, Econometric Society, vol. 46(5), pages 1013-1024, September.
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    Citations

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    Cited by:

    1. Sologon, Denisa Maria & O'Donoghue, Cathal, 2009. "Equalizing or Disequalizing Lifetime Earnings Differentials? Earnings Mobility in the EU: 1994-2001," IZA Discussion Papers 4642, Institute for the Study of Labor (IZA).
    2. Paul Gregg & Rosanna Scutella & Claudia Vittori, 2012. "Earnings Mobility and Inequality: An Integrated Framework," Melbourne Institute Working Paper Series wp2012n26, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
    3. Denisa Maria Sologon & O'Donoghue, Cathal, 2011. "Earnings Mobility in Europe: 1994-2001 : Do more flexible labour markets experience a higher earnings mobility?," MERIT Working Papers 070, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    4. Ronald Bachmann & Peggy Bechara & Sandra Schaffner, 2012. "Wage Inequality and Wage Mobility in Europe," Ruhr Economic Papers 0386, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
    5. Ronald Bachmann & Peggy Bechara & Sandra Schaffner, 2016. "Wage Inequality and Wage Mobility in Europe," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 62(1), pages 181-197, March.
    6. repec:zbw:rwirep:0386 is not listed on IDEAS
    7. Sieds, 2011. "Complete Volume LXV n.1 2011," RIEDS - Rivista Italiana di Economia, Demografia e Statistica - Italian Review of Economics, Demography and Statistics, SIEDS Societa' Italiana di Economia Demografia e Statistica, vol. 65(1), pages 1-181.

    More about this item

    Keywords

    Earnings; mobility; inequality;

    JEL classification:

    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
    • J62 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Job, Occupational and Intergenerational Mobility; Promotion

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