The Effects of Income Mobility on Equalizing Income Distribution

Although income mobility is getting more popular in the research field of income distribution,few empirical or theoretical work has been studied about the effects of income mobility on income inequality.In this paper,an expression of Gini index is derived from the absolute income mobility matrix based on an analysis of their definitions,by which we get the idea that income dynamics can improve the income inequality.All these theoretical analysis are tested with the personal income data from the period of 1998-2002.Since the flows to the higher and lower income levels have exceeded that to the middle income level,overall income inequality deteriorates.