How Income Mobility and Income Growth Explain Income Inequality Trends

16 Pages Posted: 8 Aug 2015

See all articles by Nicolas Herault

Nicolas Herault

University of Melbourne - Melbourne Institute: Applied Economic & Social Research

Date Written: August 1, 2015

Abstract

Jenkins and Van Kerm (2006) show how income inequality trends can be explained by income mobility and the equalising effect of panel-income changes. This paper extends their framework to show explicitly how the distributional effect of panel-income changes depends on the respective size and distribution of income gains and losses. An application to US data illustrates the contribution of the approach. One of the new insights of the application to US data for the 1970/2009 period is that most of the equalising effect of income growth occurs through income gains rather than income losses even in times of recession. The analysis also reveals some interesting trends regarding income mobility and the business cycle.

Keywords: Income inequality, income mobility, income growth

JEL Classification: D31, D63

Suggested Citation

Herault, Nicolas, How Income Mobility and Income Growth Explain Income Inequality Trends (August 1, 2015). Melbourne Institute Working Paper No. 14/15, Available at SSRN: https://ssrn.com/abstract=2640805 or http://dx.doi.org/10.2139/ssrn.2640805

Nicolas Herault (Contact Author)

University of Melbourne - Melbourne Institute: Applied Economic & Social Research ( email )

Level 5, FBE Building, 111 Barry Street
Parkville, Victoria 3010
Australia

HOME PAGE: http://www.findanexpert.unimelb.edu.au/researcher/person125238.html

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