Abstract
This paper combines historical cross-sectional and longitudinal data in the US to study patterns of economic growth within the income distribution. We quantify absolute mobility as the fraction of families with higher income over a period of several years. The rates of absolute mobility over periods of two to four years are procyclical and are largely confined within 45%-55%. We also find that absolute mobility decreases with income. Individuals and families occupying the lower ranks of the income distribution have a higher probability of increasing their income over short time periods than those occupying higher ranks. This also occurs during periods of increasing inequality. Our findings stem from the importance of the changes in the composition of income percentiles. These changes are over and above mechanical labor market dynamics and life cycle effects. We offer a simplified model to mathematically describe these findings.
Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
