Local Versus Global Assessment of Mobility

23 Pages Posted: 20 Oct 2003

See all articles by Christian Schluter

Christian Schluter

University of Southampton - Division of Economics

Mark M. Trede

University of Muenster - Faculty of Economics

Abstract

Mobility indices are popular tools designed to quantify the extent of income changes by aggregating "local" distributional change into a "global" scalar according to some rule. For some mobility measures, this aggregation rule is only implicit in their standard definition. We derive an insightful approximation to the (statistical) aggregation rule for the important class of mobility indices introduced by Shorrocks (Journal of Economic Theory 19 (1978), 376-93) and further generalized by Maasoumi and Zandvakili (Economic Letters 22 (1986), 97-102), which enables us to characterize their normative properties. We also develop methods for estimation and inference. A substantive empirical contribution emerges from the comparison of mobility between the United States and Germany. Our methods reveal why income mobility is higher in Germany than in the United States: Higher German mobility in the bottom of the distribution is combined with an implicitly higher weighting by the mobility index at the bottom.

Suggested Citation

Schluter, Christian and Trede, Mark M., Local Versus Global Assessment of Mobility. International Economic Review, Vol. 44, pp. 1313-1335, November 2003. Available at SSRN: https://ssrn.com/abstract=452785

Christian Schluter (Contact Author)

University of Southampton - Division of Economics ( email )

Southampton, SO17 1BJ
United Kingdom
+44 2380 59 5909 (Phone)
+44 2380 59 3858 (Fax)

HOME PAGE: www.economics.soton.ac.uk/staff/schluter/

Mark M. Trede

University of Muenster - Faculty of Economics ( email )

Universitätsstr. 14-16
48143 Munster
Germany

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