A measure of income mobility based on transition matrices and application to China and the United States

This article develops an aggregate income mobility measure based on income transition matrices. The proposed measure satisfies certain desirable properties and captures different facets of mobility. It is additively decomposable into upward and downward mobility components which help us in understanding the nature of mobility. The proposed measure is also additively decomposable into income subgroup mobility components that enable us to see whether mobility among lower income groups is different from that among higher income groups. An empirical illustration with data for China and the United States is presented.