Rank and quantity mobility in the empirical dynamics of inequality

Michael Beenstock*

*Corresponding author for this work

Research output: Contribution to journalReview articlepeer-review

13 Scopus citations

Abstract

Horizontal and vertical measures of inequality are related through mobility. The paper draws attention to two types of mobility: quantity mobility, which refers to mobility in income itself, and rank mobility, which refers to mobility in the position in the distribution of income. Individually matched census data for earnings in Israel are used to illustrate these concepts empirically. Mobility is measured between 1983 and 1995. It is shown that earnings in Israel are highly mobile. The high degree of earnings mobility implies that horizontal measures of inequality considerably overstate the underlying level of inequality. The method of errors in variables is used to distinguish between current and permanent mobility and inequality. Permanent earnings are more equal than current earnings and less mobile. Finally, the methodology is applied to PSID. It is shown that earnings were more mobile in Israel than in the United States.

Original languageEnglish
Pages (from-to)519-541
Number of pages23
JournalReview of Income and Wealth
Volume50
Issue number4
DOIs
StatePublished - Dec 2004

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