Income Mobility in the New EU Member States

In this chapter we investigate intragenerational income mobility in Central Eastern European Countries (CEECs) and Baltic Countries (BCs), vis-à-vis Western Europe, in the periods before and during the global crisis. Aspects related to individual income mobility are connected in a dynamic perspective to those of inequality since the movements of economic agents along the income ladder over time shapes income distributions and their changes. In these respects, the two fields of study are highly complementary, with income mobility allowing the identification of the microeconomic drivers of changes in absolute and relative economic positions. Despite the challenges posed by data availability, research on income mobility developed significantly over the past two decades, providing a variety of possible perspectives of analysis, with alternative aggregate indices of mobility reflecting different underlying conceptual and methodological approaches (see Fields, 2007). As regards the microeconomic determinants of income mobility, the literature has primarily emphasised the role of demographic factors such as age and gender of the individuals, and the size and demographic structure of the households (e.g., Shi et al., 2010). Attention has also been paid to physical and human capital endowments, labour market conditions and positions, and initial income levels (e.g., Woolard and Klasen, 2005). More recently, institutional aspects started receiving explicit consideration too, especially with respect to labour market institutional settings (e.g., Ayala and Sastre, 2008; Sologon and O’Donoghue, 2011).