NEW PERSPECTIVES ON INCOME MOBILITY AND INEQUALITY

Abstract

This study examines several dimensions of income mobility and inequality—mobility of individuals through their peak earnings years, intergenerational mobility, and persistence in the top 1 percent. Its main findings can be summarized as follows. Half of those age 35–40 in the bottom quintile of their cohort moved to higher quintiles 20 years later; over 60 percent moved up relative to the full population. About 70 percent of dependents from low-income households were themselves in higher quintiles 20 years later. Younger generations gradually replaced those that dominated the top percentile in 1987. The results show the importance of life cycle effects and the changing composition of top income groups.