Economic Inequality and Mobility

A Dynamic Picture

Jun 19 2012

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As was made apparent in the initial commentary of the series, there are many factors affecting the distribution of income and wealth among U.S. households over time. A critical component of the analysis of income inequality is a comprehensive picture of income and wealth mobility; this facet of the analysis provides more than just a snapshot of the income and wealth distribution at any particular moment. As economist Scott Winship mentions in his testimony before the Senate Budget Committee on income inequality and income mobility, the evidence that rising inequality has hurt the middle class and the poor is very thin at best. Furthermore, policies to address income inequality are poorly targeted and may actually create a barrier to income mobility.

Absolute and Relative Mobility
As defined in the collaborative Economic Mobility Project report of the Pew Charitable Trusts and Brookings Institution, there are two types of economic mobility to consider that differ from the changes in income resulting from rising or falling economic inequality: absolute mobility and relative mobility. Absolute mobility is a result of economic growth that enriches all groups of society. In the report, the economy is likened to a ladder that grows taller and all the ladder rungs are rising. At the same time, the rungs on the ladder may be getting closer together or farther apart as the ladder grows, demonstrating the
degree of income inequality. In turn, relative mobility can be described as the ability of
individuals to move from one rung to another dependent upon opportunity.

 

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