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

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  • de Fontenay, Catherine
  • Gorgens, Tue
  • Liu, Haoming

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. Copyright 2002 by The International Association for Research in Income and Wealth.

Suggested Citation

  • de Fontenay, Catherine & Gorgens, Tue & Liu, Haoming, 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:347-70
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    Cited by:

    1. Gørgens, Tue, 2002. "Nonparametric comparison of regression curves by local linear fitting," Statistics & Probability Letters, Elsevier, vol. 60(1), pages 81-89, November.
    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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