The Role of Mobility in Offsetting Inequality: A Nonparametric Exploration of the CPS

24 Pages Posted: 3 Nov 2003

See all articles by Catherine de Fontenay

Catherine de Fontenay

University of Melbourne - Melbourne Business School

Tue Gørgens

Australian National University (ANU) - Research School of Economics (RSE)

Haoming Liu

National University of Singapore (NUS) - Department of Economics

Abstract

This paper explores how annual earnings mobility offsets annual earnings inequality, using matched CPS data. Mobility in the economy is estimated using nonparametric quantile regression, for which we adapt state-of-the-art smoothing techniques. Mobility is measured through the churning process (changes in earnings given initial earnings) in order to identify different mobility patterns for different earnings groups. For instance, upward mobility in high earners is far weaker than its converse, downward mobility for low earners. We assess the (positive or negative) contribution to offsetting of each pattern in mobility. Innovations in our approach also allow us to identify trends and minute changes in mobility, and to pinpoint which changes in mobility have offset the increases in inequality observed over the decades.

Suggested Citation

de Fontenay, Catherine C. and Gorgens, Tue and Liu, Haoming, The Role of Mobility in Offsetting Inequality: A Nonparametric Exploration of the CPS. Available at SSRN: https://ssrn.com/abstract=325163

Catherine C. De Fontenay (Contact Author)

University of Melbourne - Melbourne Business School ( email )

200 Leicester Street
Carlton, Victoria 3053 3186
Australia

Tue Gorgens

Australian National University (ANU) - Research School of Economics (RSE) ( email )

Canberra, Australian Capital Territory 0200
Australia

Haoming Liu

National University of Singapore (NUS) - Department of Economics ( email )

10 Kent Ridge Crest
Singapore 119260
Singapore

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