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Local versus Global Assessment of Mobility

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  • Christian Schluter
  • Mark Trede

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. Copyright 2003 by the Economics Department Of The University Of Pennsylvania And Osaka University Institute Of Social And Economic Research Association.

Suggested Citation

  • Christian Schluter & Mark Trede, 2003. "Local versus Global Assessment of Mobility," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 44(4), pages 1313-1335, November.
    • Handle: RePEc:ier:iecrev:v:44:y:2003:i:4:p:1313-1335
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