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Income Mobility and Inequality: Adult‐Level Measures From the Us Tax Data Since 1979

David Splinter

Open publisher page 13 citations

Abstract

A panel of tax returns shows that income mobility can explain between none and three‐quarters of the increase in annual inequality since the 1980s. These estimates are sensitive to different measures of inequality, income definitions, and sample restrictions—mostly due to different treatments of mean‐reverting income changes among those with temporarily low incomes. This range of results suggests that sensitivity analyses are crucial to understand the robustness of income inequality and mobility measures.

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What this paper is about

A panel of tax returns shows that income mobility can explain between none and three‐quarters of the increase in annual inequality since the 1980s. These estimates are sensitive to different measures of inequality, income definitions, and sample restrictions—mostly due to different treatments of mean‐reverting income changes among those with temporarily low incomes. This range of results suggests that sensitivity analyses are crucial to understand the robustness of income inequality and mobility measures.

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Available abstract

A panel of tax returns shows that income mobility can explain between none and three‐quarters of the increase in annual inequality since the 1980s. These estimates are sensitive to different measures of inequality, income definitions, and sample restrictions—mostly due to different treatments of mean‐reverting income changes among those with temporarily low incomes. This range of results suggests that sensitivity analyses are crucial to understand the robustness of income inequality and mobility measures.

Key concepts: Economics, Inequality, Economic inequality, Robustness (evolution), Income inequality metrics, Income distribution, Demographic economics, Econometrics

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