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Abstract
This article develops an aggregate income mobility measure based on income transition matrices. The proposed measure satisfies certain desirable properties and captures different facets of mobility. It is additively decomposable into upward and downward mobility components which help us in understanding the nature of mobility. The proposed measure is also additively decomposable into income subgroup mobility components that enable us to see whether mobility among lower income groups is different from that among higher income groups. An empirical illustration with data for China and the United States is presented.
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No potential conflict of interest was reported by the author.
Notes
1 Such data are likely to involve some errors due to ‘recall bias’. Khor and Pencavel believed that such errors might have affected the values of outlying observations. To reduce the influence of these measurement errors, they trimmed the data by omitting the 0.5 percent of the lowest and the 0.5 percent of the largest values of income in the sample. They also examined the impact of this trimming procedure and found it inconsequential for their inferences about inequality and mobility.
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Satya Paul
Satya Paul is currently Honorary Professor at the Australian National University and Adjunct Professor at Amrita University, Kerala. In the past, he served as Professor of Economics at the University of Western Sydney, Senior Consultant at National Institute of Public Finance and Policy (New Delhi) and Indian Planning Commission and visiting Professor at Universities in Canada, Japan and China. He has published widely in the areas of income inequality, poverty, relative deprivation, unemployment and efficiency measurement.