American Economic Journal:
Applied Economics
ISSN 1945-7782 (Print) | ISSN 1945-7790 (Online)
Measuring Absolute Income Mobility: Lessons from North America and Europe
American Economic Journal: Applied Economics
vol. 16,
no. 2, April 2024
(pp. 1–30)
Abstract
We use linked parent-child administrative data for five countries in North America and Europe, as well as detailed survey data for two more, to investigate methodological challenges in the estimation of absolute income mobility. We show that the commonly used "copula and marginals" approximation methods perform well across countries in our sample, and the greatest challenges to their accuracy stem not from assumptions about relative mobility rates over time but from the use of nonrepresentative marginal income distributions. We also provide a multicountry analysis of sensitivity to specification decisions related to age of income measurement, income concept, family structure, and price index.Citation
Manduca, Robert, Maximilian Hell, Adrian Adermon, Jo Blanden, Espen Bratberg, Anne C. Gielen, Hans van Kippersluis, Keunbok Lee, Stephen Machin, Martin D. Munk, Martin Nybom, Yuri Ostrovsky, Sumaiya Rahman, and Outi Sirniö. 2024. "Measuring Absolute Income Mobility: Lessons from North America and Europe." American Economic Journal: Applied Economics 16 (2): 1–30. DOI: 10.1257/app.20210137Additional Materials
JEL Classification
- D31 Personal Income, Wealth, and Their Distributions
- G51 Household Finance: Household Saving, Borrowing, Debt, and Wealth
- I31 General Welfare; Well-Being
- J12 Marriage; Marital Dissolution; Family Structure; Domestic Abuse
- J31 Wage Level and Structure; Wage Differentials
- J62 Job, Occupational, and Intergenerational Mobility; Promotion