Inequality, Mobility and Income Distribution Comparisons

This paper examines the relationship between cross-sectional and life-time income distributions using a simple simulation model. It takes as its point of departure some broad conclusions regarding earnings inequality and mobility that were drawn by the OECD. These concerned comparisons between cross-sectional and lifetime inequality and the effects of changes in earnings mobility. It is argued that more attention needs to be given to the precise nature of mobility and the relationships among the various distributions.