Recent evidence on the impact of the crisis on developed countries shows that changes in income inequality and poverty have been relatively small in spite of the macroeconomic heterogeneity of the recession across different economies. However, when evaluating individual perceptions linked to the crisis any changes in the chances to scale up or lose ground in the income ladder are also crucial. Our aim in this paper is to analyze to what extent the recession has had an impact on individual equivalent incomes and, in particular, on the prevalence of downward mobility in two developed countries where job losses have been large. We find that income losses have increased, particularly in Spain, and while age and education are key determinants of the probability of experiencing an income loss in both countries, the presence of children only increases the probability of an income loss in Spain.

/pdf/the-contribution-of-income-mobility-to-economic-insecurity-2wqwhnjfqr.pdf

The Contribution of Income Mobility to Economic Insecurity in the US and Spain during the Great Recession

The opening up of access to data from the Multi‐Agency Data Integration Project provides an opportunity to fill a number of research gaps on inequality in Australia. Our paper begins the external validation of these data, focusing on what the data can tell us about the distribution, dynamics and determinants of income in Australia. It has the potential to shed new light on these aspects, but the dataset should be used with caution, taking into account some key limitations, including incomplete linkage and more limited income information for those who do not complete a tax return.

Introducing the Longitudinal Multi‐Agency Data Integration Project and Its Role in Understanding Income Dynamics in Australia

In this paper we propose an integrated framework for the analysis of earnings inequality and mobility, which enables the analysis of the distributional dimension of inequality reduction from mobility, an assessment of the economic drivers of mobility and a sense of which drivers are equalising and dis-equalising. In particular we are able to capture the extent to which life-cycle characteristics, key life events, job related characteristics, and changes in working time affect overall mobility and inequality. The framework also offers a bounded approach to isolating the underlying inequality reduction resulting from mobility from measurement error which can otherwise lead to a substantial upward bias. Using data from the Australian HILDA survey we find evidence of a sizable degree of earnings mobility in Australia over the years 2001/2 to 2008/9. The raw inequality reduction resulting from economic mobility was 0.148 Gini points from an initial estimate of 0.368, however, the bounded range based on two alternative versions of two stage estimation lies between 0.072 and 0.102 or between ¼ and 1/3 of original inequality. We show how the inequality reduction from mobility is primarily driven in the bottom part of the initial distribution, with the upper tail being particularly prone to measurement issues. A sizeable part of the identified mobility is simply driven by age-earnings growth that sees more rapid wage increases for younger workers and wage progression among women in notably stronger in reducing inequality because they start lower in distribution. Yet this rather smooth picture of earnings rising with age is shown to be substantially driven by a series of less frequent step changes associated with job-tojob moves, promotions and taking on more responsibility. There are also shocks which run against this equalising process, most notably job loss, which has substantial negative effects on earnings and disproportionately falls on lower waged workers.

/pdf/earnings-mobility-and-inequality-an-integrated-framework-iklc2hhoxz.pdf

Earnings Mobility and Inequality: An Integrated Framework

This paper assesses earnings mobility among workers in Australia between 2001/2 and 2008/9 using HILDA household panel data. We examine the pattern of individuals' earnings growth and explore the importance of mobility as an equaliser of longer-term earnings. We find that progressive earnings growth decreased overall inequality even after considering the re-ranking that occurred in the distribution. This was partly driven by growth of earnings with age and partly by step changes associated with job-to-job moves, promotions and taking on more responsibility. Shocks also acted against this equalising process, most notably job loss, which had substantial negative effects on earnings and disproportionately fell on lower-waged workers.

/pdf/individual-earnings-mobility-and-the-persistence-of-earnings-5h8umwg9o4.pdf

Individual Earnings Mobility and the Persistence of Earnings Inequalities in Australia

Recent evidence on the impact of the crisis on developed countries shows that the changes in income inequality and poverty have been relatively small in spite of the macroeconomic heterogeneity of the recession across different economies. However, when evaluating the main changes in individual perceptions linked to the crisis not only increases in inequality or poverty matter, also changes in individually-perceived chances to scale up or lose ground in the income ladder are crucial. Our aim is to analyze to what extent the recession may have had an impact on economic insecurity perceptions by increasing income losses in two developed countries where job losses have been large. The contribution of income losses to insecurity is approximated by the prevalence of downward income mobility. We identify the main socioeconomic characteristics of those most likely to suffer from a large income loss. In general, age, education and the presence of children in the household are key determinants of this event in both countries.

The contribution of income mobility to economic insecurity in the US and Spain during the Great Recession

In this paper we analyze income inequality and mobility using the first six waves of the HILDA (Household Income and Labour Dynamics in Australia) panel survey. The mobility of Australian incomes is measured and our evidence suggests that domestic wages and salaries are slightly less mobile than incomes in some other developed countries. This mobility is investigated in greater detail and it is found that much of the intertemporal variation occurs in the middle and lower end of the income distribution. Lastly we recognize that the mobility of an individual’s income may be used as a measure of economic insecurity and we present measures of permanent income inequality that account for this phenomenon. We find that permanent income inequality increases substantially when adjustments to account for aversion to volatility are performed.

/pdf/income-inequality-mobilityy-and-economic-insecurity-in-27vr5ugy7c.pdf

Income Inequality, Mobilityy and Economic Insecurity in Australia

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Income Inequality, Mobilityy and Economic Insecurity in Australia