DP17051 Measuring Upward Mobility

Author(s): Garance Genicot, Debraj Ray
Publication Date: February 2022
Date Revised: February 2022
Keyword(s): Income mobility, pro-poor growth, upward mobility
JEL(s): D63, I32, O15
Programme Areas: Development Economics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=17051

We develop a measure of upward mobility that distills central features of the relative and absolute approaches to measuring mobility. The former is embodied in the Growth Progressivity axiom: transfers of instantaneous growth rates from relatively rich to poor individuals increases upward mobility. The latter is embodied in the Growth Alignment axiom: mobility increases with higher growth for all individuals. These axioms, along with standard auxiliary restrictions, identify a simple one-parameter family of upward mobility measures, linear in individual growth rates and exhibiting geometrically declining weights on baseline incomes. A serendipitous implication of our measure is that it does not rely on panel data, which greatly expands our analytical scope to data-poor settings.