Household Income Mobility in the European Union and in Portugal: an Analysis of Labor Market and Demographic Events

This article aims to assess the impact on income mobility of transitions in the labor market and of changes in the composition of households in Portugal and in the European Union. The analysis combines two concepts of income mobility: the growth in household income and the changes in the relative position of each household in the income distribution. Based on longitudinal microdata for the period 2004-2008, the article highlights the role of social transfers and income generation at the household level in cushioning shocks on individuals. The events identified have a material impact on income mobility. For example, in the European Union, the point estimates suggest that in the case of households who experience an increase in the number of unemployed, the average fall in equivalized household income is about 19 percent. In the case in which individuals move from employment to retirement, the average fall in equivalized household income is about 6 percent. The corresponding estimates for Portugal are not statistically different from those obtained for the European Union. Additionally, the article reveals some heterogeneity in the impact of those shocks along the income distribution.