Income mobility in Argentina

Purpose: The paper analyzes the variability of labor incomes in Argentina from mid-1980s to 2005. The magnitude of income instability and its determinants are evaluated under different macroeconomic contexts. It also analyzes how income fluctuations have influenced income distribution. Finally, the income convergence hypothesis is explored. Methodology/approach: Different quantitative procedures are employed to measure mobility from dynamic information coming from the regular household survey. Four periods are distinguished that are relatively homogeneous. Dynamic pseudo-panels are also considered. Findings: The growth in occupational instability registered since the mid-1990s led to a high variability of incomes despite the macroeconomic stability enjoyed throughout the nineties. Moreover, the panorama of growing inequality in the distribution of monthly income (the usual measure employed in Argentina) is also appropriate to describe what happened with the changes in the distribution of more permanent incomes. Finally, long-term income mobility in Argentina is scarce, indicating that the income path does not converge to the general mean. Research limitations/implications (if applicable): Data refer only to Greater Buenos Aires since microdata are not available for the other areas covered by survey for the entire period under analysis. However, results are reasonably representative of the whole urban areas of the country. Originality/value of paper: This research identifies the relative importance of labor market and macroeconomic factors in explaining income mobility. Moreover, it is for the first time in Argentina that dynamic information coming from panel data and pseudo-panels are analyzed together.