Income mobility of individuals in China and the United States

Although much has been written about annual income inequality in China, little research has been conducted on longer‐run measures of income inequality and on income mobility. This paper compares income mobility of urban individuals in China and the United States in the 1990s. The following questions are taken up: To what extent are measures of annual income inequality misleading indicators of long‐run income inequality? How much income mobility was there in China in the first half of the 1990s and how did this compare with mobility in other countries? Have real income increases been greater for the poor or the rich? How important is the variation in permanent incomes in China and how has this changed?     

Income mobility and risk during the business cycle: Comparing adjustments in labour markets in two Latin-American countries

This paper uses panel data from Argentina and Mexico and a new measure of mobility ‐ the Gini index of mobility ‐ to answer three questions. First, is there a trend towards rising labour income mobility over time in these two countries? Second, is there a relationship between income mobility and growth common to both countries, or does that relationship depend on the institutional features of each country’s labour markets? Third, do we observe more labour income mobility within some groups such as the young and the less educated than within other groups? JEL classification: D31, E32, J63.     

Parental Wealth and the Black–White Mobility Gap in the U.S.

Utilizing longitudinal data from the Panel Study of Income Dynamics (PSID), this paper examines the relationship between parental wealth and intergenerational income mobility for black and white families. I find that total parental wealth is positively associated with upward mobility for low‐income white families, but is not associated with reduced likelihood of downward mobility for white families from the top half of the income distribution. Conversely, I find that total parental wealth does not have the same positive association for low‐income black families, while home ownership may have negative associations with the likelihood of upward mobility for these families. However, for black families from the top half of the income distribution, home equity is associated with a decreased likelihood of downward mobility, suggesting a heterogeneous relationship between home ownership and mobility for black families.     

Is Mobility in the United States Still Alive? Tracking career opportunities and income growth

Longitudinal data are used to compute income and earnings mobility in the 1970s and 1980s. The various strengths and weakness of different perspectives on mobility are assessed, with the change in real income or earnings being chosen as the one that most closely resembles the common-sense meaning of progress or decline. Care is taken to choose the proper age ranges and to define quantiles on the basis of 10-year income or earnings. Based on the Panel Study on Income Dynamics, this paper finds the share of family income losers among prime-age adults rose from 21% in the 1970s to 33% in the 1980s. This jump is reflected in a corresponding jump in the share of male earners with declining earnings over the same time period. Female earners, however, worked 44% more in the 1980s than the 1970s and fewer were on declining earnings paths. In terms of sub-populations, lower income and less educated groups had larger increases of income and earnings losses.     

The role of education and household composition for transitory and permanent income inequality–evidence from PSID data

Transitory and permanent shocks to income have been shown to be important determinants of household consumption. This paper shows that there are significant differences in the trends of transitory and permanent income inequality between demographic groups since the 1980s. Using data from the Panel Study of Income Dynamics, educational attainment and the composition of a household are found to play a key role. While permanent inequality increases steadily for educated households, it is flat over large parts of the sample period for the less educated households. Transitory inequality increases for all households headed by couples whereas it is constant for single households. Altogether, permanent shocks account for a larger part of the income variance of educated households whereas transitory shocks are relatively more important for the less educated. These results are able to shed light on the transmission of changes in income inequality to consumption inequality.     

中国居民家庭的收入变动及其对长期平等的影响

本文利用“中国经济、人口、营养和健康调查”1 989— 1 997年期间 4期家庭收入和家长特征的模块数据 (paneldata) ,用时间依赖定义收入变动 ,度量了全体家庭和分4种类型的家庭在上世纪 80年末至 90年后半期的收入变动。发现在总体收入分配中 ,高比例持续贫困的发生比较分散 ,并不固定在哪一类型的家庭上。平均而言 ,农村家庭的持续贫困比例稍高。与此相反 ,持续高收入的家庭集中在城市、郊区和城镇 ,农村的富裕家庭变动大 ,收入不稳定。分组家庭之间 ,农村家庭的收入变动最大。分组家庭内部 ,家长为中年和壮年人的家庭人收入景况较好 ,富裕老人家庭能否保持富裕在农村和在其它分组差别很大。总体而言 ,我国居民家庭收入分配的变动在这一时期减慢 ;收入变动在所有4个时期内都有利于分配的平等 ,2 0世纪 90年代中期后在农村和城镇家庭的作用大幅减弱 ,但对改善城市家庭的平等分配作用增强。     

DISTRIBUTIONS OF REAL INCOME: WITHIN COUNTRIES AND BY WORLD INCOME CLASSES

Income and expenditure data from 14 countries (representing one-third of the world's population), mostly from the 1970s, are used to construct national income distributions and , after normalizing by purchasing power parities, to construct a "world" distribution of real income. The density of real-income equivalent groups (socio-economic classes) across countries is measured for the "affluent," the "well-off," and the "poor." In comparison with earlier studies, most national distributions of income seem to have been improving, the numbers of those in poverty (based on real income) are lower, and, most important (and disturbing for some) is that the "affluent" class (and those above "middle class" income levels) has (prematurely) swelled in a number of developing countries.     

Testing mean reversion in target-zone exchange rates

This study applies a multinomial logit model of human-capital migration to examine the factors influencing the movement of physicians within Canadian provinces between 1976 and 1992. The empirical investigation covers general practitioners and specialists (it excludes interns/residents) between seven regions (Atlantic Canada, Quebec, Ontario, Manitoba, Saskatchewan, Alberta and British Columbia). The results suggest that differences in real income have a positive and significant effect on a physician's decision to migrate form one province to another. Provinces with the highest after tax income, highest expenditure per physician, and highest fee-per-service rates have the highest net rate of in-migration. Income differences are however, not the only factor influencing a physician's choice to move. Working conditions within a province, which we proxy with the number of hospitals beds and health expenditures per capita, are also important factors. Likewise, the ratio of rural to urban population, distance between the major city in each province and provincial population all have a negative impact on a physician's migration choice. Finally, a dummy variable is used to allow for language differences between Quebec and the rest of the provinces and find that language differences have a significant and negative impact on a physician decision to migrate.     

Household income mobility in rural China: 1989–2006

This article analyzes household income mobility in rural China between 1989 and 2006. The results indicate that incomes in rural China are highly mobile. The high degree of rank and quantity mobility implies re-ranking and mean convergence in income distribution, but the disparity between them also enlarged with leveling-up and Gini divergence brought about by economic growth. In addition, there exists considerable transitorily poor and rich in positional mobility. Though, transitory movement provides an opportunity for both poor and rich and decreases long-term inequality, it also causes considerable income fluctuations and economic insecurity. Moreover, the equalizing effect of income mobility on income inequality is weakening.     

Imputed Rent and Income Inequality: A Decomposition Analysis for Great Britain, West Germany and the U.S.

This article deals with income advantages derived from owner-occupied housing and their impact on the personal income distribution. Using micro-data from the British Household Panel Study (BHPS), the German Socio-Economic Panel (SOEP), and the U.S. Panel Study of Income Dynamics (PSID) we find distinct cross-national differences in terms of the prevalence and extent of imputed rent. Results from inequality decomposition analyses show this overall impact to be the net effect of two conflicting changes: On the one hand there is increasing income inequality between the groups of owneroccupiers and renters, respectively, and, on the other hand, we find inequality to be decreasing within the group of those owner-occupiers who own outright. When focussing on imputed rent as a means of old-age provision, our results for all three countries show an income advantage for, as well as a poverty reducing effect among the elderly. The empirical findings support the claim for the need of an improved harmonization of this non-cash income component especially for the purpose of cross-national comparative research.     

WEALTH AND THE DISTRIBUTION OF INCOME: PERMANENT AND TRANSITORY EFFECTS

This paper examines the permanent and transitory effects of changes in wealth, the top federal marginal income tax rate, and capital gains tax rate on the distribution of Adjusted Gross Income (AGI). This paper establishes the importance of wealth in determining the distribution of AGI, and results here suggest that its effects can negate the permanent effect of a change in both tax rates. Of the two tax rates, the capital gains tax rate is the most important for AGI distribution. The marginal income tax rate is notably less important for long run behavior, but does have short run impacts.     

JOB DISPLACEMENT AND THE INTER‐TEMPORAL MOVEMENT OF WORKERS THROUGH THE EARNINGS AND INCOME DISTRIBUTIONS

This paper uses the Panel Study of Income Dynamics to examine how job displacement influences intragenerational earnings and income mobility. Job displacement increases the probability of downward labor earnings mobility for several years after separation occurs. Furthermore, the probability of being in the bottom half of the earnings distribution increases significantly, not only in the year of displacement, but also for several years afterwards. However, after considering additional measures of financial well‐being (income from other family members and government transfer payments), the short‐ and long‐term impact of displacement on movements throughout the distribution is reduced. (JEL J63, J65)     

中国城镇代际收入流动实证研究*——基于Jorgenson Fraumeni未来终生收入的估算

本文运用中国家庭收入项目调查（CHIP）1988年、1995年、2002年及2007年独生子女样本,使用Jorgenson Fraumeni未来终生收入法,旨在更加精确地估算中国城镇的代际收入流动水平,并分析其时间趋势、群体分布特点。研究发现：第一,基于该方法得到的未来终生年收入均值可最大程度显著减小父代收入测量误差导致的向下偏误。第二,我国城镇代际收入流动水平趋于下降,收入结构趋于固化,1988年、1995年、2002年、2007年代际收入弹性系数范围分别为（大于0262）、(大于0483)、（0466,0544）以及（0483,0554）。第三,中国城镇的代际收入流动水平呈现非线性特征,不同收入水平的家庭之间代际收入流动差别较大。     

The impact of work-limiting disabilities on earnings and income mobility

This article uses the 1968–2007 waves of the Panel Study of Income Dynamics (PSID) to examine how work-limiting disabilities influence the intragenerational earnings and income mobility of individuals. The results show that work-limiting disabilities increase the probability of downward mobility for several years after onset. Furthermore, the probability of being in the bottom portions of the distributions increases significantly, not only during the year of onset but also for at least 10 years afterwards. These results are more pronounced for those individuals suffering from a disability that is more chronic or severe in nature. Income from spousal earnings and government transfer payments offers some protection against disability’s adverse effect, with more protection being provided to those who are more chronically disabled.     

When income differences hurt or excite: The nonlinear effect of regional inequality on subjective wellbeing

Combining information from the European Union Statistics on Income and Living Conditions and the European Social Survey, we investigate the relationship between subjective well-being and income inequality using regional inequality indicators and individual data. We assume that inequality aversion and perception of social mobility affect the impact of regional inequality on subjective well-being in opposite directions. We find evidence of an inverse U-shaped effect of inequality, where inequality starts to have a positive effect on subjective well-being that becomes negative with a switch point before the average of the Gini index for the entire sample. The rationale for our nonlinear finding is that Hirschman's tunnel effect (and the positive effect of perceived social mobility) prevails for low levels of inequality, while inequality aversion and negative relative income effects are relatively stronger when inequality is higher. Robustness checks on different sample splits are consistent with the hypothesis of the two drivers.     

Modeling of Income and Indicators of Poverty and Social Exclusion Using the Generalized Beta Distribution of the Second Kind

There are three reasons why estimation of parametric income distributions may be useful when empirical data and estimators are available: to stabilize estimation; to gain insight into the relationships between the characteristics of the theoretical distribution and a set of indicators, e.g. by sensitivity plots; and to deduce the whole distribution from known empirical indicators, when the raw data are not available. The European Union Statistics on Income and Living Conditions (EU‐SILC) survey is used to address these issues. In order to model the income distribution, we consider the generalized beta distribution of the second kind (GB2). A pseudo‐likelihood approach for fitting the distribution is considered, which takes into account the design features of the EU‐SILC survey. An ad‐hoc procedure for robustification of the sampling weights, which improves estimation, is presented. This method is compared to a non‐linear fit from the indicators. Variance estimation within a complex survey setting of the maximum pseudo‐likelihood estimates is done by linearization (a sandwich variance estimator), and a simplified formula for the sandwich variance, which accounts for clustering, is given. Performance of the fit and estimated indicators is evaluated graphically and numerically.     

Income Inequality in Australia in an International Comparative Perspective

Earlier comparative work on income distribution has tended to suggest that Australia is characterised by less income inequality than other industrialised economies. Concerns about the quality of the Australian data used in such comparisons have led to the need for more detailed assessment of the situation. The Luxembourg Income Study has been a focus for this work by bringing together microdata sets for a range of countries and reorganising them to conform to standardised concepts and definitions. This paper builds on earlier work undertaken as part of the Luxembourg Income Study by including Australia in an international comparative analysis of income distribution and redistribution. The Australian data are those from the 1981–82 Income and Housing Survey, with income tax imputed onto the data file. Results are presented for the gross and net income distributions between both families and individuals in seven countries. A common set of equivalence scales is also used to adjust for differing family needs. The results indicate that, using several summary measures of inequality, the distribution of income in Australia is less equal than in four of the other six countries studied. Earlier research which placed Australia high on the international league table of income equality is thus not confirmed by the results.     

Income Mobility and Income Inequality in Rural China

The economic literature has argued for a long time that income mobility could attenuate the degree of cross-sectional inequality by offering people opportunities to improve their socio-economic position. Using the longitudinal data from the China Health and Nutrition Survey (CHNS) from 1989 to 2011, we measure income mobility as the degree to which longer-term incomes are distributed more or less equally than yearly income. Five main results are emphasized. First, there is strong income mobility in rural China that partly offsets yearly income inequality. Second, income mobility has decreased since the 2000s, indicating that income distribution is becoming more rigid. Third, mobility is mainly associated with transitory income fluctuations, particularly in the two tails of the distribution. Fourth, income mobility has an equalizing effect on income distribution. Fifth, we show that non-agricultural income mobility has substantially increased over the period and that its equalizing nature has also recently increased. While the development of the non-agriculture sector in rural China was a crucial factor in explaining the increase in rural inequality until the mid-2000s, we suggest that the large-scale generalisation of such non-agricultural opportunities partly accounts for the decline in rural inequality observed since the mid-2000s.     

Global corporations and local politics: income redistribution vs. FDI subsidies

Income inequality has been used empirically to explain the mixed performance of developing countries in attracting FDI. This paper sets up a theoretical model that links the skewness of the income distribution to a host government's willingness to subsidize FDI. Large skewness makes government subsidies less likely because the median income person prefers redistribution. Little skewness, however, does not guarantee FDI. In addition, host governments may switch from positive to no subsidies if a shift in economic variables changes how the policymaker trades off the FDI benefits and income redistribution, thereby offering an alternative to the conventional hold-up story.     

Foreign direct investment,growth and income inequality in less developed countries

How does foreign direct investment (FDI) affect economic growth in less developed countries (LDCs)? What is its association with changes in the income distribution? This paper empirically examines these issues within a cross section of less developed countries between 1970 and 1989. FDI is positively associated with economic growth within this sample of countries. However, there is no strong association between FDI and changes in income inequality within these same countries and over this same time period. Hence, there is no evidence that FDI is increasing income inequality within this group of LDCs.