Research Paper Working Papers of the ESRC Research Centre on Micro-Social Change 99-08
Earnings inequality and earnings mobility in Great Britain: evidence from the BHPS, 1991-94
01 Apr 1999
This paper draws on the first four waves of data of the British Household Panel Survey (BHPS) to analyse the statics and dynamics of the earnings distribution in the early nineties. Motivated by the wide range of concerns which mobility is viewed to serve, I analyse mobility under three complementary headings: (i) predictability or state dependence; (ii) movement; and (iii) welfare implications; and find that mobility is rather low. When mobility is modelled as a discrete stochastic process, earnings are best described by a second order Markov chain.