We propose a framework for the measurement of income mobility over several time periods, based on the notion that multi-period mobility amounts to measuring the degree of association between the individuals and the time periods. More precisely we compare the actual income share of individuals at a given time in the total income of all individuals over the whole period analyzed, with their “expected” share, assumed to be equal to the hypothetical income share in the total income of society over the whole accounting period that an individual would have had at a given time, had there been complete independence between the individuals and the time periods. We then show that an appropriate way of consistently measuring multi-period mobility should focus on the absolute rather than the traditional (relative) Lorenz curve and that the relevant variable to be accumulated should be the difference between the “a priori” and “a posteriori” shares previously defined. Moving from an ordinal to a cardinal approach to measuring multi-period mobility, we then propose classes of mobility indices based on absolute inequality indices. We illustrate our approach with an empirical application using the EU-SILC rotating panel dataset. Our empirical analysis seems to vindicate our approach because it clearly shows that income mobility was higher in the new EU countries (those that joined the EU in 2004 and later). We also observe that income mobility after 2008 was higher in three countries that were particularly affected by the financial crisis: Greece, Portugal, and Spain.
|Number of pages||26|
|Journal||Research on Economic Inequality|
|State||Published - 2020|
Bibliographical noteFunding Information:
The authors would like to thank an anonymous referee, Francesco Andreoli, John Bishop, Alessio Fusco, Thesia Garner, and the participants in the 83rd Southern Economic Association Conference in Tampa for their comments and suggestions on previous versions of this paper. Marek Kośny would like to acknowledge the financial support of the Polish National Science Centre (Project No. 3804/B/ H03/2011/40). Marek Kośny and Gaston Yalonetzky gratefully acknowledge the financial support of InGRID and the European Commission as well as the hospitality of LISER, Luxembourg during a 2-week visit. The research leading to these results has received support under the European Commission’s 7th Framework Programme (FP7/2013–2017) under grant agreement no. 312691, InGRID – Inclusive Growth Research Infrastructure Diffusion.
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- Absolute Gini index
- Absolute Lorenz curve
- Financial crisis
- Multi-period mobility