Assessing the Equalizing Force of Mobility Using Short Panels: France, 1990-2000 - Archive ouverte HAL Access content directly
Journal Articles Review of Economic Studies Year : 2009

Assessing the Equalizing Force of Mobility Using Short Panels: France, 1990-2000

(1) , (2)
1
2
Stéphane Bonhomme
  • Function : Author
Jean-Marc Robin

Abstract

In this paper, we document whether and how much the equalizing force of earnings mobility has changed in France in the 1990's. 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 time-series 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 expectation-maximization 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 for 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.
Fichier principal
Vignette du fichier
assessingef.pdf (725.39 Ko) Télécharger le fichier
Origin : Explicit agreement for this submission
Loading...

Dates and versions

hal-01027423 , version 1 (22-12-2014)

Identifiers

Cite

Stéphane Bonhomme, Jean-Marc Robin. Assessing the Equalizing Force of Mobility Using Short Panels: France, 1990-2000. Review of Economic Studies, 2009, 76, pp.63-92. ⟨hal-01027423⟩
61 View
613 Download

Share

Gmail Facebook Twitter LinkedIn More