Publication:
Income Risk, Income Mobility and Welfare

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dc.contributor.authorKrebs, Tom
dc.contributor.authorKrishna, Pravin
dc.contributor.authorMaloney, William F.
dc.date.accessioned2013-01-04T21:16:12Z
dc.date.available2013-01-04T21:16:12Z
dc.date.issued2012-10
dc.description.abstractThis paper develops a framework for the quantitative analysis of individual income dynamics, mobility and welfare. Individual income is assumed to follow a stochastic process with two (unobserved) components, component representing measurement error or transitory income shocks and an Autoregressive (AR(1)) component representing persistent changes in income. The analysis uses a tractable consumption-saving model with labor income risk and incomplete markets to relate income dynamics to consumption and welfare, and derive analytical expressions for income mobility and welfare as a function of the various parameters of the underlying income process. The empirical application of the framework using data on individual incomes from Mexico provides striking results. Much of measured income mobility is driven by measurement error or transitory income shocks and therefore (almost) welfare-neutral. A smaller part of measured income mobility is due to either welfare-reducing income risk or welfare-enhancing catching-up of low-income individuals with high-income individuals, both of which have economically significant effects on social welfare. Decomposing mobility into its fundamental components is thus seen to be crucial from the standpoint of welfare evaluation.en
dc.identifierhttp://documents.worldbank.org/curated/en/2012/10/16900833/income-risk-income-mobility-welfare
dc.identifier.doi10.1596/1813-9450-6254
dc.identifier.urihttps://hdl.handle.net/10986/12108
dc.languageEnglish
dc.language.isoen_US
dc.publisherWorld Bank, Washington, DC
dc.relation.ispartofseriesPolicy Research Working Paper;No. 6254
dc.rightsCC BY 3.0 IGO
dc.rights.holderWorld Bank
dc.rights.urihttp://creativecommons.org/licenses/by/3.0/igo/
dc.subjectAGGREGATE GROWTH
dc.subjectASSET PRICING
dc.subjectATTRITION
dc.subjectBORROWING
dc.subjectBRIDGE
dc.subjectBUSINESS CYCLES
dc.subjectCOMPONENT PARTS
dc.subjectCONSUMERS
dc.subjectCONSUMPTION LEVELS
dc.subjectCONSUMPTION PLANS
dc.subjectCONVERGENCE PARAMETER
dc.subjectDATA SET
dc.subjectDECREASING RATE
dc.subjectDEVELOPING COUNTRIES
dc.subjectDEVELOPING WORLD
dc.subjectDEVELOPMENT POLICY
dc.subjectDISPLACEMENT
dc.subjectDISTRIBUTION OF INCOME
dc.subjectDRIVERS
dc.subjectEARNINGS INSTABILITY
dc.subjectECONOMETRICS
dc.subjectECONOMIC ACTIVITY
dc.subjectECONOMIC DEVELOPMENT
dc.subjectECONOMIC FLUCTUATIONS
dc.subjectECONOMIC GROWTH
dc.subjectECONOMIC INEQUALITY
dc.subjectECONOMIC REVIEW
dc.subjectECONOMIC STUDIES
dc.subjectECONOMIC THEORY
dc.subjectEMPIRICAL APPLICATION
dc.subjectEMPIRICAL STUDIES
dc.subjectEQUAL WEIGHT
dc.subjectEQUATIONS
dc.subjectEQUILIBRIUM
dc.subjectEQUILIBRIUM PRICES
dc.subjectEXPECTED UTILITY
dc.subjectFAMILY INCOME
dc.subjectFRAMEWORK
dc.subjectFUNCTIONAL FORM
dc.subjectFUTURE LABOR
dc.subjectGENERAL EQUILIBRIUM
dc.subjectGROWTH LITERATURE
dc.subjectHIGH INCOME
dc.subjectHIGH INCOMES
dc.subjectHOUSEHOLD MEMBERS
dc.subjectINCOME
dc.subjectINCOME DATA
dc.subjectINCOME DIFFERENCES
dc.subjectINCOME DISTRIBUTION
dc.subjectINCOME DISTRIBUTIONS
dc.subjectINCOME DYNAMICS
dc.subjectINCOME INEQUALITY
dc.subjectINCOME RISK
dc.subjectINCOME SHOCKS
dc.subjectINCOME TAX
dc.subjectINCOME VARIABILITY
dc.subjectINCOMPLETE MARKETS
dc.subjectINCREASING INEQUALITY
dc.subjectINDIVIDUAL INCOMES
dc.subjectINEQUALITY MEASUREMENT
dc.subjectINNOVATION
dc.subjectINSURANCE
dc.subjectINTEREST RATE
dc.subjectLABOR ECONOMICS
dc.subjectLABOR INCOME
dc.subjectLABOR MARKET
dc.subjectLOG INCOME
dc.subjectLONGITUDINAL DATA
dc.subjectLOW INCOME
dc.subjectLOW INCOMES
dc.subjectMACROECONOMIC FACTORS
dc.subjectMACROECONOMICS
dc.subjectMEAN INCOME
dc.subjectMEASUREMENT ERROR
dc.subjectMIDDLE CLASS
dc.subjectMONETARY ECONOMICS
dc.subjectNORMAL DISTRIBUTION
dc.subjectPERMANENT INCOME
dc.subjectPOLICY DISCUSSIONS
dc.subjectPOLICY RESEARCH
dc.subjectPOLITICAL ECONOMY
dc.subjectPRODUCTIVITY
dc.subjectPRODUCTIVITY GROWTH
dc.subjectPUBLIC POLICY
dc.subjectRANDOM WALK
dc.subjectRELATIVE IMPACT
dc.subjectRESIDUAL INCOME
dc.subjectRISK AVERSION
dc.subjectRISK SHARING
dc.subjectSALARY
dc.subjectSIGNIFICANT NEGATIVE
dc.subjectSOCIAL MOBILITY
dc.subjectSPAN
dc.subjectSPEED
dc.subjectSTATICS
dc.subjectURBAN EMPLOYMENT
dc.subjectUTILITY FUNCTION
dc.subjectVALUATION
dc.subjectWAGES
dc.subjectWEALTH
dc.subjectWORK FORCE
dc.subjectYOUNGER WORKERS
dc.titleIncome Risk, Income Mobility and Welfareen
dspace.entity.typePublication
okr.crosscuttingsolutionareaJobs
okr.crossref.titleIncome Risk, Income Mobility and Welfare
okr.date.disclosure2012-10-01
okr.date.doiregistration2025-04-10T09:29:40.912415Z
okr.doctypePublications & Research::Policy Research Working Paper
okr.doctypePublications & Research
okr.docurlhttp://documents.worldbank.org/curated/en/2012/10/16900833/income-risk-income-mobility-welfare
okr.globalpracticeMacroeconomics and Fiscal Management
okr.globalpracticeTransport and ICT
okr.globalpracticeSocial Protection and Labor
okr.globalpracticePoverty
okr.guid197051468171845830
okr.identifier.doi10.1596/1813-9450-6254
okr.identifier.externaldocumentum000158349_20121031155010
okr.identifier.internaldocumentum16900833
okr.identifier.reportWPS6254
okr.language.supporteden
okr.pdfurlhttp://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2012/10/31/000158349_20121031155010/Rendered/PDF/wps6254.pdfen
okr.sectorEducation :: Primary education
okr.themePublic expenditure, financial management and procurement
okr.themeRule of law
okr.themeLegal institutions for a market economy
okr.themePublic sector governance
okr.topicSocial Protections and Labor::Labor Policies
okr.topicPoverty Reduction::Inequality
okr.topicRoads and Highways
okr.topicEconomic Theory and Research
okr.topicMacroeconomics and Economic Growth::Income
okr.topicTransport
okr.volume1 of 1
relation.isAuthorOfPublicationc7d4d195-f430-5039-b564-a3e95b24a117
relation.isAuthorOfPublication.latestForDiscoveryc7d4d195-f430-5039-b564-a3e95b24a117
relation.isSeriesOfPublication26e071dc-b0bf-409c-b982-df2970295c87
relation.isSeriesOfPublication.latestForDiscovery26e071dc-b0bf-409c-b982-df2970295c87
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