Krebs, Tom; Krishna, Pravin; Maloney, William F. - 2012
This 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, an i.i.d. component representing … measurement error or transitory income shocks and an AR(1) component representing persistent changes in income. We use a tractable …
