Income inequality, income mobility and economic growth

What is it about?

The paper proposes a new decomposition of inequality changes explaining the equalising effect of income growth (or panel-income changes). The main contribution lies in explicitly distinguishing the contributions of income gains and losses, including their size and distribution.

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Why is it important?

The new framework allows us to answer questions such as: is income growth equalising because income losses are small on average but highly concentrated at the top? Or is it because income gains are large and only slightly larger for the poor? Hence it becomes possible to characterise growth processes with the same equalising effect but with different welfare implications due to the different distributions of income gains and losses.