Intragenerational Mobility in Italy: a Non-parametric Estimates

The paper proposes a novel methodology based on a non-parametric method to estimate intragenerational income mobility. We apply it to the analysis of mobility of a sample of Italian individuals (between 16 and 65 years old) from the Survey on Household Income and Wealth (SHIW) by the Bank of Italy in the period 1987-2010. First, the linear specification of the Markovian model is estimated removing the assumption of no serial correlation in the error term suggesting a low level of income mobility. Second, a non-linear specification of Markovian model is estimated providing both “local” and global measures of income mobility. Income mobility appears to be low; in particular it reaches a minimum in the middle of income distribution and maximum values at the extreme bounds, with an income elasticity ranging from 0.4 to 0.8 in the relevant range of income (0.5-2). Moreover, from 1987-1998 to 2000-2010 income mobility has increased over time, in particular in the middle of distribution.