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The Role of Mobility in Offsetting Inequality: A Nonparametric Exploration of the CPS

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  • Catherine De Fontenay
  • Tue Gørgens
  • Haoming Liu

Abstract

This paper explores how annual earnings mobility offsets annual earnings inequality, using matched CPS data. Mobility in the economy is estimated using nonparametric quantile regression, for which we adapt state–of–the–art smoothing techniques. Mobility is measured through the churning process (changes in earnings given initial earnings) in order to identify different mobility patterns for different earnings groups. For instance, upward mobility in high earners is far weaker than its converse, downward mobility for low earners. We assess the (positive or negative) contribution to offsetting of each pattern in mobility. Innovations in our approach also allow us to identify trends and minute changes in mobility, and to pinpoint which changes in mobility have offset the increases in inequality observed over the decades.

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  • Catherine De Fontenay & Tue Gørgens & Haoming Liu, 2002. "The Role of Mobility in Offsetting Inequality: A Nonparametric Exploration of the CPS," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 48(3), pages 347-370, September.
    • Handle: RePEc:bla:revinw:v:48:y:2002:i:3:p:347-370
    DOI: 10.1111/1475-4991.00058
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    Cited by:

    1. David Splinter, 2022. "Income Mobility and Inequality: Adult‐Level Measures From the Us Tax Data Since 1979," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 68(4), pages 906-921, December.
    2. Groisman, Fernando & Beccaría, Luis Alberto, 2006. "Income instability, mobility and distribution in Argentina," Revista CEPAL, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), August.

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