Introducing Unobserved Heterogeneity in Earnings Mobility

Thibault Brodaty

No 2007-35, Working Papers from Center for Research in Economics and Statistics

Abstract: This paper introduces and describes unobserved heterogeneity in earnings quintiles transitionmatrices in the US. Unobserved heterogeneity is found to play a crucial role in earnings mobility.Each individual is attracted, given his characteristics, towards a specific zone of the distribution.At the stationnary equilibrium, the earnings quintiles distribution is thus segmented. Interestingly,while the level of earnings mobility has remained quite stable since 1970, the width of thesezones has decreased, such that this segmentation was more pronounced in the 80’s and the 90’sthan in the 70’s, especially in the middle of the quintiles distribution.

Pages: 29
Date: 2007
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Related works:
Working Paper: Introducing Unobserved Heterogeneity in Earnings Mobility (2007)
Working Paper: Introducing Unobserved Heterogeneity in Earnings Mobility (2007)
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