Earnings Mobility in the EU: 1994-2001

Using a consistent comparative dataset for 14 EU countries, we explore the earnings mobility-inequality linkage in the EU over the period 1994-2001 on two axes: first the evolution of short-term mobility and its link with cross-sectional inequality; second, the evolution of long-term mobility relative to short-term mobility and the implications for lifetime or long-term inequality. We use two types of mobility measures: (i) a rank measure derived from the changes in the individual ranks in the earnings distribution; (ii) a recent measure of mobility as an equalizer of longer-term incomes, complementary to the wellknown Shorrocks index. We find evidence supporting a negative association between the evolution of cross-sectional inequality and short-term rank mobility across the EU. Long-term, Denmark appears to have the most mobile earnings distribution with the second highest equalizing effect in the EU. The only disequalizing mobility in a lifetime perspective is found in Portugal. Besides making a substantive contribution to the literature on cross-national comparisons of earnings mobility at the EU level, our paper brings evidence to the debate regarding the ability of the Shorrocks index in capturing the true equalizing/disequalizing effect of mobility.