Absolute Inter- and Intragenerational Mobility: the Role of Income Growth and Inequality
Absolute mobility quantifies the probability of families or individuals to see their income increase over generations or over several years. In this talk I’ll present theoretical and empirical work on how we can measure absolute mobility with imperfect data and show how it is related to income growth and to income inequality. Unintuitively, large uncertainties associated with the limited ability to follow the incomes of families or individuals over time, amounts only to a small uncertainty in the absolute mobility estimates. We show how this can be used to account for the evolution of inter- and intra-generational mobility in different countries over the past several decades. In particular, we find that income growth is much more dominant than inequality in determining absolute mobility.