EconPapers    
Economics at your fingertips  
 

Assessing the equalizing force of mobility using short panels: France 1990-2000

Stéphane Bonhomme and Jean-Marc Robin

No CWP02/08, CeMMAP working papers from Centre for Microdata Methods and Practice, Institute for Fiscal Studies

Abstract:

In this paper, we document whether and how much the equalizing force of earnings mobility has changed in France in the 1990s. For this purpose, we use a representative three-year panel,the French Labour Force Survey. We develop a model of earnings dynamics that combines a flexible specification of marginal earnings distributions (to fit the large cross-sectional dimension of the data) with a tight parametric representation of the dynamics (adapted to the short timeseries dimension). Log earnings are modelled as the sum of a deterministic component, an individual fixed effect, and a transitory component which is assumed first-order Markov. The transition probability of the transitory component is modelled as a one-parameter Plackett copula. We estimate this model using a sequential EM algorithm.

We exploit the estimated model to study employment/earnings inequality in France over the 1990-2002 period. We show that, in phase with business cycle fluctuations (a recession in 1993 and two peaks in 1990 and 2000), earnings mobility decreases when cross-section inequality and unemployment risk increase. We simulate individual earnings trajectories and compute present values of lifetime earnings over various horizons. Inequality presents a hump-shaped evolution over the period, with a 9% increase between 1990 and 1995 and a decrease afterwards.Accounting for unemployment yields an increase of 11%. Moreover, this increase is persistent, as it translates into a 12% increase in the variance of log present values. The ratio of inequality in present values to inequality in one-year earnings, a natural measure of immobility or of the persistence of inequality, remains remarkably constant over the business cycle.

JEL-codes: D30 D63 J22 J64 (search for similar items in EconPapers)
Date: 2008-02-08
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (11)

Downloads: (external link)
http://cemmap.ifs.org.uk/wps/cwp208.pdf (application/pdf)

Related works:
Journal Article: Assessing the Equalizing Force of Mobility Using Short Panels: France, 1990-2000 (2009) Downloads
Working Paper: Assessing the equalizing force of mobility using short panels: France, 1990-2000 (2009)
Working Paper: Assessing the equalizing force of mobility using short panels: France, 1990-2000 (2009)
Working Paper: Assessing the Equalizing Force of Mobility Using Short Panels: France, 1990-2000 (2009) Downloads
Working Paper: Assessing the equalizing force of mobility using short panels: France, 1990-2000 (2009)
Working Paper: Assessing the Equalizing Force of Mobility Using Short Panels: France, 1990-2000 (2009) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ifs:cemmap:02/08

Ordering information: This working paper can be ordered from
The Institute for Fiscal Studies 7 Ridgmount Street LONDON WC1E 7AE

Access Statistics for this paper

More papers in CeMMAP working papers from Centre for Microdata Methods and Practice, Institute for Fiscal Studies The Institute for Fiscal Studies 7 Ridgmount Street LONDON WC1E 7AE. Contact information at EDIRC.
Bibliographic data for series maintained by Emma Hyman ().

 
Page updated 2025-03-31
Handle: RePEc:ifs:cemmap:02/08