Changing Income Inequality and Panel Income Changes

Duval‐Hernández, Robert; Fields, Gary S.; Jakubson, George H.

doi:10.2139/ssrn.2604385

SSRN Journal

2015

DOI: 10.2139/ssrn.2604385

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Changing Income Inequality and Panel Income Changes

Robert Duval‐Hernández¹,

Gary S. Fields

George H. Jakubson

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Cited by 3 publications

(2 citation statements)

References 16 publications

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“…O'Neill and Van Kerm (2008) apply the framework ofJenkins and Van Kerm (2006) to study σ and β convergence. In addition,Dhongde and Silber (2016) andBárcena-Martin et al (2019) provide a framework to analyze distributional change based on Gini-related measures that can serve to capture σ and β convergence.8 Furthermore, in cases when the Lorenz curves cross, we additionally analyze in Section 3.4 changes in inequality using the family of transfer-sensitive inequality indices, whenever one distribution third-order stochastically dominates another one.9 In the macroeconomics literature the term "absolute convergence" is used when the only explanatory variable in the regression is initial income.10 In a previous working paper(Duval Hernández et al, 2015), we presented results pertaining to variance-based inequality indices and to Lorenz curve comparisons. Since then, we have derived many new results which we bring together in this paper.…”

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“…Furthermore, in cases of Lorenz crossing, we additionally analyze in Subsection OA.3 in the Online Appendix, changes in inequality using the family of transfer-sensitive inequality indices, whenever one distribution third-order stochastically dominates another one.14 In the macroeconomics literature, the term "absolute convergence" is used when the only explanatory variable in the regression is initial income.15 In a previous working paper(Duval Hernández et al, 2015), we presented results pertaining to variance-based inequality indices and to Lorenz curve comparisons. Since then, we have derived many new results which we bring together in this article.…”

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confidence: 99%

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Inequality and Panel Income Changes: Conditions for Possibilities and Impossibilities

Duval‐Hernández

Fields

Jakubson

2022

Int Economic Review

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The question of who benefits from economic growth is most commonly assessed by using anonymous data from comparable cross sections to calculate changes in income inequality. An alternative is to utilize longitudinal data and assess the pattern of panel income changes. In this paper, we derive precise theoretical conditions reconciling various measures of rising/falling inequality together with various measures of convergent/divergent panel income changes. We have four main findings: i) for a large number of inequality indices, as well as for Lorenz curves, we derive precise conditions for rising inequality and convergent panel income changes to coexist, ii) we demonstrate that in order to observe both rising inequality and panel convergence, income changes in the panel have to be "large" (and in the right direction), where the meaning of "large" varies depending on the particular regression under analysis, iii) for a large number of inequality indices, as well as for Lorenz curves, we show that it is impossible to have both falling inequality together with divergent panel income changes in shares or in proportions, iv) we find a precise relationship between convergence/divergence of panel income changes in dollars on the one hand and the coefficient of variation, the correlation coefficient be-tween initial and final incomes, and the aggregate economic growth rate on the other.

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confidence: 99%

mentioning

confidence: 99%

Inequality and Panel Income Changes: Conditions for Possibilities and Impossibilities

Duval‐Hernández

Fields

Jakubson

2022

Int Economic Review

Self Cite

View full text Add to dashboard Cite

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Earnings mobility, inequality, and economic growth in Argentina, Mexico, and Venezuela

et al. 2014

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This paper examines changes in individual earnings during positive and negative growth periods in three Latin American economies: Argentina, Mexico, and Venezuela. We ask two major questions. First, do panel income changes favor the income recipients who started at the top of the income distribution ("divergent mobility") or those who started at the bottom ("convergent mobility")? And second, are the groups that are found to gain the most when the economy is growing those that are found to lose the most when the economy is contracting ("symmetry of mobility") or is the pattern asymmetric in the sense that the same groups do best both in times of economic growth and in times of economic decline? We find support for the divergent mobility hypothesis only in scattered years in the cases of Mexico and Venezuela and no support at all in the case of Argentina. Rather, earnings mobility is most frequently convergent or neutral in all three countries. As for the symmetry of mobility hypothesis, we find that it is rejected in nearly all cases; rather, those groups that gain the most when the economy is growing are also the ones that gain the most or lose the least when the economy is contracting. Furthermore, we discuss how the absence of divergence reconciles with rising inequality in the countries under study.

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Explaining the Equalising Effect of Panel-Income Changes

Herault

2016

The B.E. Journal of Economic Analysis &Amp; Policy

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Panel-income changes tend to be equalising but existing approaches provide little insight on the nature of this equalising process. I present a new decomposition framework showing explicitly how the equalising effect of panel-income changes depends on the respective size and distribution of panel-income gains and losses. One of the new insights gained from the application to US data for the 1970/2009 period is that most of the equalising effect occurs through income gains rather than income losses even in times of recession.

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Changing Income Inequality and Panel Income Changes

Cited by 3 publications

References 16 publications

Inequality and Panel Income Changes: Conditions for Possibilities and Impossibilities

Inequality and Panel Income Changes: Conditions for Possibilities and Impossibilities

Earnings mobility, inequality, and economic growth in Argentina, Mexico, and Venezuela

Explaining the Equalising Effect of Panel-Income Changes

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