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On the Evaluation of Economic Mobility

  • Peter Gottschalk
  • Enrico Spolare

This paper presents a framework for the evaluation and measurement of reversal and origin independence as separate aspects of economic mobility. We show how that evaluation depends on aversion to multi-period inequality, aversion to inter-temporal fluctuations, and aversion to second-period risk. We construct extended Atkinson indices that allow us to quantify the relative impact of reversal and time independence. We apply our approach to the comparison of income mobility in Germany and in the United States. We find that the ranking of Germany and the US on the extent of reversal depends on the degree of aversion to inequality. Reversal has a higher impact in the US than in Germany for lower degrees of aversion to multi-period inequality, while reversal has higher impact in Germany for higher degrees of inequality aversion. By contrast, Americans gain more than Germans from origin independence for a large range of degrees of inequality aversion.

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Paper provided by Brown University, Department of Economics in its series Working Papers with number 2001-25.

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Date of creation: 2001
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Handle: RePEc:bro:econwp:2001-25
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Department of Economics, Brown University, Providence, RI 02912

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