Dynamic Aspects of Earnings Mobility

50 Pages Posted: 12 Apr 2004 Last revised: 19 May 2008

See all articles by Lee A. Lillard

Lee A. Lillard

(Deceased)

Robert J. Willis

University of Michigan at Ann Arbor - Department of Economics; National Bureau of Economic Research (NBER)

Date Written: September 1976

Abstract

This paper proposes an econometric methodology to deal with life cycle earnings and mobility among discrete earnings classes. First, we use panel data on male log earnings to estimate an earnings function with permanent and serially correlated transitory components due to both measured and unmeasured variables. Assuming that the error components are normally distributed, we develop statements for the probability that an individual's earnings will fall into a particular but arbitrary time sequence of poverty states. Using these statements, we illustrate the implications of our earnings model for poverty dynamics and compare our approach to Markov chain models of income mobility.

Suggested Citation

Lillard, Lee A. and Willis, Robert J., Dynamic Aspects of Earnings Mobility (September 1976). NBER Working Paper No. w0150. Available at SSRN: https://ssrn.com/abstract=260340

Lee A. Lillard

(Deceased)

N/A

Robert J. Willis (Contact Author)

University of Michigan at Ann Arbor - Department of Economics ( email )

611 Tappan Street
Ann Arbor, MI 48109-1220
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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