Winners and losers. an analysis of earnings mobility in Italy

Abstract

In this paper we investigate earnings mobility patterns of Italian workers, from 1974 to 1988, using longitudinal data. The availability of longitudinal micro-data allows us to deal with individual characteristics as well as workers' labor market histories. In the empirical analysis of partitioning of the earnings distribution by deciles is used and the overall hierarchical mobility of individuals is investigated. Transition matrices are computed in order to compare wage formation and mobility processes. Several summary indicators of mobility are presented in the analysis and the relations between them discussed. The paper offers some interesting findings. First, the evolution of earnings and mobility patterns show a significant inertia in the wage structure. Second, a low-earnings "trap" for individuals who start (and remain) in the lower deciles of the wage distribution has been detected. Finally, some interesting differences emerge between earnings mobility, while the former are more frequently found in the low-earnings "trap".