On the characterisation and measurement of the welfare effects of income mobility from an ex-ante perspective

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    Abstract

    The paper employs a rank-dependent formulation of the social welfare function with time-separable utilities to evaluate the economic consequences of income mobility from an ex-ante perspective. The resultant class of measures can be decomposed not only in terms of structural and exchange mobility but also in terms of vertical and horizontal mobility, thereby encompassing two of the main approaches in the literature. We illustrate our measurement framework by comparing mobility in the USA and Germany using data from the Cross-National Equivalent File 1980-2005. We find that the pattern of income mobility in the USA was both less pro-poor and more horizontally inequitable than in Germany, but that the latter did not translate into higher levels of exchange mobility given higher levels of absolute inequality and the vertical stance of the growth process.
    Original languageEnglish
    PublisherUniversity of Dundee
    Publication statusPublished - 2008

    Publication series

    NameDundee Discussion Papers in Economics
    PublisherUniversity of Dundee
    No.219
    ISSN (Print)1473-236X

    Keywords

    • Income mobility
    • Ex-ante welfare analysis
    • USA
    • Germany

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    Allanson, P. (2008). On the characterisation and measurement of the welfare effects of income mobility from an ex-ante perspective. (Dundee Discussion Papers in Economics; No. 219). University of Dundee.