Earnings Mobility Research Articles

Earnings mobility across three generations of natives in Finland: A comparison of Finnish and Swedish speakers

We examine earnings mobility across three generations in Finland and compare two native groups with equal constitutional rights, Finnish speakers and Swedish speakers. Based on register data of the total population, we employ rank-rank regressions to assess the degree to which earnings in men relate to their fathers’ and paternal grandfathers’ earnings. We estimate regressions on the national level and in regions with Swedish-speaking population. The earnings rank of the grandfather is found to play a modest role net of the earnings rank of the father. Earnings mobility is higher in regions where the numerical minority of Swedish speakers is settled, but the two ethnolinguistic groups differ only in the Helsinki capital region, where earnings mobility is higher among the Swedish speakers. Less than one fifth of this ethnolinguistic gradient can be attributed to educational and other observed differences. These findings suggest that, in a geographically concentrated and well-performing ethnolinguistic group, social integration and networks may play a role in providing opportunities independently of parents’ achievements.

Intergenerational earnings mobility in Chile: the tale of the upper tail

Intergenerational earnings mobility in Chile: the tale of the upper tail

Intergenerational mobility of earnings in rural China

ABSTRACT Due to dataset limitations, the results from previous studies on intergenerational income mobility in rural China are inconsistent. Using panel data from the Chinese Health and Nutrition Survey, this study develops a modified version of the model by Zimmerman [Zimmerman DJ (1992) Regression towards mediocrity in economic stature. Am Econ Rev 82(3):409–429] and estimates the intergenerational earnings mobility in rural China. The new estimate demonstrates that intergenerational earnings elasticity is likely greater than 0.5, suggesting a relatively low rate of intergenerational mobility.

The Effect of Foreign and Domestic Graduate Degrees on the Earnings of Immigrants to the U.S.

Using a novel panel dataset of recent immigrants to the United States, we identify return migration rates and earnings trajectories for two immigrant groups: those with foreign graduate degrees and those who immigrate and acquire a U.S. graduate degree. We focus on immigrants (of both genders) to the United States who arrive in the same entry cohort and from the same country of birth over the period 2005–2015. In linked demographic and administrative data, we find that downward earnings trajectories are predictive of return migration for immigrants with degrees acquired abroad. Meanwhile, immigrants with U.S. graduate degrees experience mainly upward earnings mobility while in the United States, but we find that the return migrants in this population have earnings that, on average, are lower than their permanent counterparts.

Intergenerational earnings mobility in Ghana

Intergenerational earnings mobility in Ghana

Climbing the economic ladder: Earnings inequality and intragenerational mobility among Thai formal workers

This paper investigates inequality and intragenerational economic mobility among formal workers in a developing country with large inequality. Understanding economic mobility is important because it shapes our perception of inequality. Despite its significance, evidence on intragenerational mobility, especially that based on administrative data, is relatively limited in developing countries. Using Thailand’s tax return data, we study the evolution of earnings inequality, estimate medium-term earnings mobility, and examine the heterogeneity of mobility across age, gender and employment arrangement. Our analysis yields three main findings. First, annual earnings inequality rises during the 2009–2018 period. We find that the inequality is largely permanent, and its increase is primarily driven by top-earnings workers. Second, medium-term mobility tends to be limited at both ends of the earnings distribution, with particularly pronounced persistence observed at the top decile. Our suggestive comparison indicates that Thailand’s earnings mobility is among the lowest in the pool of evidence from both developed and developing countries. Third, there is a considerable heterogeneity in mobility regarding employment arrangement. Workers in less-formal jobs have much lower upward mobility than those in more-formal employment. Our findings also indicate significant heterogeneity in mobility with respect to gender and age.

The Economic Assimilation of Second-Generation Men: An Analysis of Earnings Trajectories Using Administrative Records

Previous research on the economic assimilation of recent U.S.-born children of immigrants who form the new second generation has disproportionately focused on their educational attainment and other early-life outcomes. In this study, we examine the earnings trajectories of second-generation men through a large part of their adult lives using a unique dataset that links respondents from more than two decades of the Current Population Survey to their longitudinal tax records. This longitudinal information allows us to compare the progress second-generation men of different race and ethnicity make in narrowing the earnings gaps with later generations. We consider the extent to which differences in educational attainment and in early occupational placement affect the earnings trajectories of second-generation men. New second-generation men as a whole experience considerable earnings mobility during their lifetimes. However, we also find large differences by race and ethnicity that cannot be fully explained by educational attainment. Second-generation Hispanic men in particular begin their careers with an earnings deficit relative to later-generation White men and fall further behind. Thus, the stalling or reversal in Hispanic economic assimilation appears to begin during the course of the second generation rather than in later generations as previously thought.

Return Migration and Earnings Mobility in the Middle East and North Africa

This study examines how workers’ pre-existing socio-economic profiles andcross-border return-migration experiences affect their lifetime andintergenerational transmission of economic status in three Middle East andNorthern Africa (MENA) countries. We apply transition analysis andinstrumental variable regressions to seven harmonized Labor Market PanelSurveys - Egypt (1998, 2006, 2012), Jordan (2010, 2016), and Tunisia(2014) - to link the current economic outcomes of prime-age male workersto those in prior years and to those of their fathers. Real earnings in prioryears are imputed using the historic positions of individuals, as well as thejob-type and occupation group cell means observed in the survey year. Wefind that migration decisions and destinations are driven by economic,geographic, and family-history considerations. Return migrants landhigher-earning jobs and are more mobile across generations thannever-migrants. They outperform non-migrants, not only now but also inprevious years and, according to evidence, even before their migration spell.After controlling for mitigating factors, the role of migration disappears,implying that individual-level effects and demographics are responsible.

How High Can You Climb? Earnings Inequality and Intragenerational Earnings Mobility in a Developing Country: Evidence from Thai Tax Returns

How High Can You Climb? Earnings Inequality and Intragenerational Earnings Mobility in a Developing Country: Evidence from Thai Tax Returns

Breaking the Links: Natural Resource Booms and Intergenerational Mobility

Abstract The paper demonstrates that a large economic sock such as an oil boom increases intergenerational earnings mobility among directly affected men, mostly through increased bottom-up mobility, but not for women. Preexisting local differences in mobility or shifts in the earnings distributions do not drive these findings. Instead, changes in relative earnings paid to workers with different skills offer the best explanation. Moreover, we document that intergenerational mobility is significantly higher for the indirectly affected thirdgeneration and that the oil boom broke the earnings link between first- and third-generation men.

Upward Earnings Mobility in Hong Kong: Policy Implications Based on a Census Data Narrative

AbstractUsing census data spanning several decades, this paper offers a new and intuitive approach to understanding earnings mobility. We use “mobility ratios” and “immobility ratios” as indicators of the speed of upward mobility at the top end (i.e. moving into the ranks of the well-off) and the bottom end of the income distribution (i.e. moving out of poverty) as each cohort ages. We demonstrate that in Hong Kong, relative income upward mobility did slow down considerably for those born 1976–1980 and after. The 1976–1980 cohort is a watershed, prior to which upward mobility was generally robust and after which upward mobility was significantly subdued. The later cohorts generally start off with a much lower percentage that is well-off and a much higher percentage that is poor. Given such a low base, the apparent existence of upward mobility is not much solace for the majority as many are stuck in poverty. The prospect of slower economic growth in the coming decade suggests that it is unlikely that their lifetime fortunes will be better than those of older cohorts.

Did earnings mobility change after minimum wage introduction? Evidence from parametric and semi‐nonparametric methods in Germany

SummaryWe analyze the evolution of earnings mobility in Germany between 2011 and 2018. We use transition matrices and parametric and semi‐nonparametric copula models to assess the impact of the introduction of the national minimum wage on January 1, 2015, on individual positional persistence in the wage distribution. We find a drop in mobility at the bottom of the distribution. This is confirmed both by the parametric and the semi‐nonparametric methods used. Prediction accuracy of the semi‐nonparametric model is higher than that of the fully parametric model.

Did earnings mobility change after minimum wage introduction? Evidence from parametric and semi‐nonparametric methods in Germany

Did earnings mobility change after minimum wage introduction? Evidence from parametric and semi‐nonparametric methods in Germany

Worker Earnings Mobility and the Conception of Value in Private Equity Leveraged Buyouts

Over four leveraged buyout (LBO) waves since 1980, private equity firms restructured thousands of large U.S. businesses with tens of millions of employees. At the same time, earnings for most U.S. workers stagnated despite rising corporate productivity. While private equity proponents argue that LBOs increase corporate competitiveness and create shared value, LBO critics argue that workers often bear the cost of high LBO debt. I argue that two main conceptions of value in private equity leveraged buyouts - operational and financial - have different implications for worker earnings mobility. I use administrative data on hundreds of millions of U.S. workers to show that LBOs on average increase the earnings of more-educated workers and lower the earnings of less-educated workers. The large negative LBO effects appear in the riskier LBOs enacted at the peak of the LBO waves, when the cost of high-yield debt is low and creditors offer debt with lower restrictions on organizational behavior. Findings from worker-level difference-in-difference models support this argument. I show that the cost of high-yield debt predicts higher leveraged deals and I match LBO-acquired companies to non-acquired companies based on timing, capitalization, size, industry, stock market, earnings, and level of financial distress. This study develops the organizational theory of economic inequality by explaining how the different value conceptions of corporate restructuring have different impacts on worker opportunity. Management theorists should continue to study LBOs and other organizational restructuring processes that reassign corporate control to impact diverse stakeholder groups.

Earnings mobility during labor market reforms in urban China

This paper provides empirical evidence on patterns of earnings mobility for China for the 2000s and before to study how the labor market reform in the late 1990s affects individuals' earnings mobility. We find convergent earnings mobility in the 1990s but clearly divergent earnings mobility in the 2000s, meaning that those with the highest earnings to begin with experienced the largest earnings gains after 2000. Policies would be desirable such as compensating low-skill workers by establishing government-initiated training programs. More generally, welfare policies are necessary to help disadvantaged workers avoid from low-income or poverty traps who suffer from negative shocks in market-oriented reforms.

Intergenerational earnings mobility and demographic dynamics: Welfare analysis of an aging Japan

This paper simulates the effects of intergenerational earnings mobility on individual welfare and future demography in an aging and depopulating Japan. A simulation analysis finds that increased intergenerational mobility across income classes promotes economic growth, and from a long-term perspective, a higher mobility potentially achieves Pareto improvements. In the long run, however, it will hinder economic growth. This is because increased mobility increases the population share of individuals with a higher labor productivity, enhancing economic growth in the initial stage, but because of their lower fertility, an increase in their population ratio negatively effects the total population over time.

The decline in long-term earnings mobility in the U.S.: Evidence from survey-linked administrative data

The growth in cross-sectional inequality has sparked concern about its consequences for long-run economic outcomes. We use survey-linked administrative data to estimate trends in long-term earnings mobility in the U.S. since 1980 focusing on differential trends by gender, education, and race-ethnicity. We find that long-term earnings mobility has declined since the 1980s. Declines in upward mobility have occurred for both men and women, reversing a trend prior to 1980 of increasing long-run mobility for women. The largest declines in mobility are for women and college-educated workers, which is driven both by increases in the rank of earnings early in prime earning years and growing persistence in ranks across the earnings distribution.

Labor displacement effects over inter-temporal earnings mobility

I study how involuntary job loss affects workers' inter-temporal labor earnings mobility. I use Panel Study Income Dynamics (PSID) 1973-2017 survey waves to construct transition probability matrices and compute ordered logistic regression estimates. I find that being displaced increases downward mobility compared to never displaced workers. The reduction of hours worked, large spells of unemployment and the destruction of firm-specific human capital depreciate the market value of a displaced worker generating significant labor income losses.

Opportunity and inequality across generations

We analyze how intergenerational mobility and inequality would change relative to the status quo if dynasties had access to optimal insurance against low ability of future generations. Based on a dynamic, dynastic Mirrleesian model, we find that insurance against intergenerational ability risk increases in the social optimum relative to the status quo. This implies less intergenerational mobility in terms of welfare but no quantitatively significant change in earnings mobility. Earnings mobility is thus similar across economies with different incentives and welfare, illustrating that changes in earnings mobility cannot be interpreted readily in welfare terms without further analysis.

The mobility of top earnings, income, and wealth in China: Facts from the 2011–2017 China household finance survey

We document rich facts of the intra-generational mobility of households in the top fractiles of earnings, income, and wealth distributions in China using the panel data of the 2011–2017 China Household Finance Survey. We find high mobility co-exists with high inequalities within various top fractile groups. In specific, persistence rates of the top 1% group implied an inverted-U pattern for top earnings mobility, a declined trend of top income mobility, and an improved trend for top wealth mobility during the study period. Although the overall trends of mobility for top earnings, income, and wealth showed diverse patterns, they are still considered high from global comparisons. Besides, the top 1% households generate significantly more income from business and allocate a higher fraction of their assets to private equity.