Measuring absolute income mobility: lessons from North America and Europe

Manduca, Robert, Hell, Maximilian, Adermon, Adrian, Blanden, Jo, Bratberg, Espen, C. Gielen, Anne, Van Kippersluis, Hans, Bok Lee, Keun, Machin, Stephen, D. Munk, Martin, Nybom, Martin, Ostrovsky, Yuri, Rahman, Sumaiya and Sirnio, Outi (2024) Measuring absolute income mobility: lessons from North America and Europe. American Economic Journal: Applied Economics, 16 (2). 1 - 30. ISSN 1945-7782

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Abstract

We use linked parent–child administrative data for five countries in North America and Europe, as well as detailed survey data for two more, to investigate methodological challenges in the estimation of absolute income mobility. We show that the commonly used “copula and marginals” approximation methods perform well across countries in our sample, and the greatest challenges to their accuracy stem not from assumptions about relative mobility rates over time but from the use of nonrepresentative marginal income distributions. We also provide a multicountry analysis of sensitivity to specification decisions related to age of income measurement, income concept, family structure, and price index.

Item Type:	Article
Official URL:	https://www.aeaweb.org/articles?id=10.1257/app.202...
Additional Information:	© 2024 American Economic Association
Divisions:	Economics Centre for Economic Performance
Subjects:	H Social Sciences > HB Economic Theory
JEL classification:	D - Microeconomics > D3 - Distribution > D31 - Personal Income, Wealth, and Their Distributions J - Labor and Demographic Economics > J6 - Mobility, Unemployment, and Vacancies > J62 - Job, Occupational, and Intergenerational Mobility E - Macroeconomics and Monetary Economics > E2 - Consumption, Saving, Production, Employment, and Investment > E24 - Macroeconomics: Employment; Unemployment; Wages; Intergenerational Income Distribution (includes wage indexation)
Date Deposited:	28 Feb 2024 16:33
Last Modified:	25 Apr 2024 08:30
URI:	http://eprints.lse.ac.uk/id/eprint/122124

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