Measuring Wealth Mobility

37 Pages Posted: 12 Mar 2009

Date Written: January 16, 2009

Abstract

In the economic literature on mobility measurement issues are generally disregarded. The aim of the paper is to assess their impact on the analysis of Italian households' mobility across the wealth distribution in the 1989-2004 period. The paper shows that response (or measurement) errors and transitory shocks may account up to 30-50 per cent of the observed mobility (depending on the index used). Moreover, also the dynamics of mobility is likely to be biased by the dynamics of response (or measurement) errors. In the case of Italy, the declining level of observed mobility is downward biased by the increasing difficulty in measuring household wealth (which results in an increase of response errors). Measurement issues appear to be more important than socio-demographic characteristics to explain mobility.

Keywords: wealth mobility, attrition, response error, latent class analysis

JEL Classification: C33, D3, P46

Suggested Citation

Neri, Andrea, Measuring Wealth Mobility (January 16, 2009). Bank of Italy Temi di Discussione (Working Paper) No. 703. Available at SSRN: https://ssrn.com/abstract=1357284 or http://dx.doi.org/10.2139/ssrn.1357284

Andrea Neri (Contact Author)

Bank of Italy ( email )

Via Nazionale 91
00184 Roma
Italy

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