Earnings Mobility, Inequality,and Economic Growth in Argentina, Mexico, and Venezuela

Abstract

This chapter 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.

Cross‐Sectional Versus Panel Income Approaches: Analyzing Income Distribution Changes for the Case of Mexico

“…Research presented in Fields et al . () indicates that to an important extent such earnings changes are transitory in nature. If so, then it remains to assess how these changes influence a less transitory measure of inequality.…”

“…Empirically though, in analyses of panel income changes at the individual level it is almost always found that such changes are convergent, i.e. the initially disadvantaged individuals tend to have more positive (less negative) income changes than the individuals who were initially rich (Dragoset and Fields, ; Fields, ; Fields et al, ), on average irrespectively of whether inequality rises or falls.…”

Movilidad de ingresos de corto plazo en América Latina 2002-2015

“…Desde esta perspectiva, sociedades con mayor movilidad de ingresos deberían presentar velocidades de convergencia mayores y viceversa. La existencia de convergencia y su velocidad han sido analizadas en numerosos trabajos empíricos, entre los que destacan Antman y McKenzie (2007), Cuesta, Ñopo y Pizzolitto (2011), Fields et al (2003a) y Fields et al (2015).…”

“…Los importantes cambios de régimen macroeconómico que nuestro país atravesó en las últimas dos décadas invitan a indagar en las consecuencias que estos tuvieron sobre las trayectorias de ingresos de individuos y hogares, tarea que puede ser llevada adelante utilizando las bases de datos provistas por la EPH. 17 Los resultados de Beccaria y Groisman son a su vez consistentes con los presentados por Fields et al (2015), donde se analiza convergencia en 1996-2003 diferenciando entre el coeficiente correspondiente a años de crecimiento y el correspondiente a años de contracción. Las características individuales de los jefes del hogar resultan explicativas de este nivel de variabilidad aunque en menor medida en relación a lo que ocurre cuando se trabaja con datos individuales.…”

“…Por su parte, Albornoz y Menéndez (2007) trabajan con un período algo más reducido y hacen mayor hincapié en la cuestión de la convergencia, aunque sus conclusiones son consistentes con las de Beccaria y Groisman en líneas generales. A su vez,Fields et al (2015) profundizan en el análisis de convergencia (mediante la aplicación de sucesivas correcciones econométricas a las regresiones tradicionales) y…”