A Measure of Income Mobility with an Empirical Application

This paper develops an aggregate income mobility measure based on income transition matrices. The proposed measure satisfies certain desirable properties and captures different facets of mobility. It is additively decomposable into upward and downward mobility components which help us in understanding the nature of mobility. The proposed measure is also additively decomposable into income sub-group mobility components that enable us to see whether mobility among lower income groups is different from that among higher income groups. An empirical illustration with data for China and the United States is presented. Contact details: Satya Paul Professor of Economics School of Economics and Finance Room EDG 136, Parramatta Campus University of Western Sydney Locked bag 1797, Penrith South DC, NSW 1797 Australia. Email: [email protected] Tel (Office): + 61-2-96859352, Mob: +61-404816145