Europe vs. The United States: Is There a Trade-Off Between Mobility and Inequality?

Abstract

This paper asses the scope of income mobility from a comparative perspective and explores if there is an observable relationship with inequality. More specifically, the main hypotheses to be tested are the existence of notable differences in mobility between the USA and the European Union which could offset the observed differences in inequality, the possible differences within the European Union and, finally, whether or not the factors which determine mobility differ greatly. To this end, a broad range of mobility indicators is used, their structure in each country is studied and the principal determinants are analyzed by means of different decomposition exercises.