Discussion paper

DP17051 Measuring Upward Mobility

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.

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Citation

Ray, D and G Genicot (2022), ‘DP17051 Measuring Upward Mobility‘, CEPR Discussion Paper No. 17051. CEPR Press, Paris & London. https://cepr.org/publications/dp17051