Short-Term Household Income Mobility Before and After the Great Recession: A Four-Country Study

CEFIN Working Papers No 76

41 Pages Posted: 30 Jun 2019

See all articles by Elizabeth J. Casabianca

Elizabeth J. Casabianca

Dipartimento di Analisi e Ricerca Economica, Prometeia; Università Politecnica delle Marche

Elena Giarda

Dipartimento di Analisi e Ricerca Economica, Prometeia; Università degli studi di Modena e Reggio Emilia (UNIMORE) - Center for Research in Banking and Finance (CEFIN); Fondazione Rodolfo Debenedetti

Date Written: June 19, 2019

Abstract

This paper analyses short-term intra-generational income mobility in France, Italy, Spain and the UK by exploiting the longitudinal component of EU-SILC for the periods 2005-2008 and 2012-2015. We investigate whether and to what extent the ability of households to move along the income distribution changed after the 2008 crisis and whether heterogeneities among countries exist. For this purpose, we employ mobility indexes and transition matrices as well as estimation of a 2SLS regression and of a dynamic ordered probit with random effects. Overall, indexes and transition matrices point to a decrease of mobility in the aftermath of the crisis. The econometric analyses suggest both the existence of a convergence process of incomes and state dependence of current and lagged income in both periods. We also observe sluggish income convergence and lower upward mobility in the second period. Among the microeconomic drivers, education and employment status are positive determinants of mobility. Finally, our results confirm cross-country heterogeneity.

Keywords: intra-generational income mobility, mobility indexes, 2SLS, dynamic ordered probit, EU-SILC

JEL Classification: C25, C26, D31, J60

Suggested Citation

Casabianca, Elizabeth Jane and Giarda, Elena, Short-Term Household Income Mobility Before and After the Great Recession: A Four-Country Study (June 19, 2019). CEFIN Working Papers No 76. Available at SSRN: https://ssrn.com/abstract=3411606 or http://dx.doi.org/10.2139/ssrn.3411606

Elizabeth Jane Casabianca

Dipartimento di Analisi e Ricerca Economica, Prometeia ( email )

Viale G. Marconi 43
Bologna
Italy

Università Politecnica delle Marche ( email )

Piazzale Martelli 8
Ancona, 18039
Italy

Elena Giarda (Contact Author)

Dipartimento di Analisi e Ricerca Economica, Prometeia ( email )

Via G. Marconi 43
Bologna, 40122
Italy
+390516480911 (Phone)
+39051220753 (Fax)

HOME PAGE: http://https://www.prometeia.it/en/research-insights

Università degli studi di Modena e Reggio Emilia (UNIMORE) - Center for Research in Banking and Finance (CEFIN) ( email )

via Berengario 51
Modena, modena I-41100
Italy

Fondazione Rodolfo Debenedetti ( email )

Via Roentgen 1,
Room 5.C1-11
Milan, Milano 20136
Italy

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