Measuring Movement of Incomes

Abstract

We consider a small set of elementary properties for income movement measures, and show that there is essentially only one measure that satisfies all of these properties: the per capita aggregate change in log‐incomes. We demonstrate next that this movement‐mobility measure has a number of appealing descriptive and normative properties, and provide a formal generalization of our basic characterization theorem drawing from the related literature on poverty measurement. Finally, we present here an empirical application in which we show by using our new measure that there has been a broad‐based increase in income movement in the United States between the 1970s and 1980s.