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A Brief Review of the Literature on Earnings Mobility in Developing Countries

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[Excerpt] The literature on income and earnings mobility falls into three categories: 1. Macro mobility studies address the entire economy. They ask the question, how much income mobility and/or earnings mobility is there in the economy? 2. A second group of studies, micro mobility studies, examines patterns of income and earnings change over time for different individuals or groups. They ask the questions, which individuals or households experience movements of what magnitudes, and what are the correlates and determinants of these movements? 3. Within the micro mobility studies are a number of studies that look specifically at poverty dynamics. These studies ask the question, how many households move into and out of poverty within a certain time frame and what are the correlates and determinants of these movements? The current project asks the following questions about earnings mobility: * Who benefits the most from the growth process, and how much do they benefit? * Who is left behind or made more vulnerable? * Who is hurt when economic decline takes place and by how much (and who can withstand or even see income gains in such environments)? * What are the forces behind these changes and behind the experiences of different groups of individuals? Given these questions, this literature review focuses on studies of micro earnings mobility. This review excludes a number other literatures: studies that present transition matrices across income classes; studies of macro mobility; studies of poverty dynamics, which necessarily are based on data on household incomes from all sources and/or household consumption; studies that use pseudo-panels rather than true panels or retrospective data; and studies using data from one or a very small number of villages, cities, or occupational groups.

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Earnings; mobility; economic growth; micro mobility studies


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