Skip to main content

Earnings mobility, inequality, and economic growth in Argentina, Mexico, and Venezuela


This paper examines changes in individual earnings during positive and negative growth periods in three Latin American economies: Argentina, Mexico, and Venezuela. We ask two major questions. First, do panel income changes favor the income recipients who started at the top of the income distribution (“divergent mobility”) or those who started at the bottom (“convergent mobility”)? And second, are the groups that are found to gain the most when the economy is growing those that are found to lose the most when the economy is contracting (“symmetry of mobility”) or is the pattern asymmetric in the sense that the same groups do best both in times of economic growth and in times of economic decline? We find support for the divergent mobility hypothesis only in scattered years in the cases of Mexico and Venezuela and no support at all in the case of Argentina. Rather, earnings mobility is most frequently convergent or neutral in all three countries. As for the symmetry of mobility hypothesis, we find that it is rejected in nearly all cases; rather, those groups that gain the most when the economy is growing are also the ones that gain the most or lose the least when the economy is contracting. Furthermore, we discuss how the absence of divergence reconciles with rising inequality in the countries under study.

This is a preview of subscription content, access via your institution.


  1. 1.

    Henry, A.: Politics and the Professors. Brookings Institution, Washington, DC (1978)

    Google Scholar 

  2. 2.

    Acemoglu, D., Autor, D.H.: Skills, tasks and technologies: Implications for employment and earnings. In: Ashenfelter, O., Card, D.E. (eds.) Handbook of Labor Economics, Vol. 4, pp 1043–1171. Elsevier, Amsterdam (2011)

  3. 3.

    Atkinson, A.B., Bourguignon, F. (eds.): Handbook of Income Distribution, Vol. 2. Elsevier, Amsterdam (forthcoming)

  4. 4.

    Antman, F., McKenzie, D.J.: Earnings mobility and measurement error: A pseudo-panel approach. Econ. Dev. Cult. Chang. 56 (1), 125–161 (2007)

    Article  Google Scholar 

  5. 5.

    Azariadis, C., Stachurski, J.: Poverty Traps. In: Aghion, P., Durlauf, S.N. (eds.) Handbook of Economic Growth, Vol. 1A, pp 295–384. Elsevier Science, Amsterdam (2005)

  6. 6.

    Baulch, B. (ed.): Why Poverty Persists: Poverty Dynamics in Asia and Africa. Edward Elgar, Cheltenham (2011)

  7. 7.

    Bound, J., Brown, C., Duncan, G.J., Rodgers, W.L.: Evidence on the validity of cross-sectional and longitudinal labor market data reviewed. J. Labor Econ. 12 (3), 345–368 (1994)

    Article  Google Scholar 

  8. 8.

    Bound, J., Brown, C., Mathiowetz, N.: Measurement error in survey data. In: Heckman, J., Leamer, E. (eds.) Handbook of Econometrics, Vol. 5, pp 3705–3843. Elsevier Science, Amsterdam (2001)

  9. 9.

    Cuesta, J., Ñopo, H., Pizzolitto, G.: Using pseudo-panels to measure income mobility in Latin America. Rev. Income Wealth 57 (2), 224–246 (2011)

    Article  Google Scholar 

  10. 10.

    Deaton, A.: The Analysis of Household Surveys: A Microeconometric Approach to Development Policy. The Johns Hopkins University Press, Baltimore (1997)

    Book  Google Scholar 

  11. 11.

    Duval Hernández, R.: Dynamics of Labor Market Earnings and Sector of Employment in Urban Mexico, 1987-2002. Ph.D. dissertation. Cornell University (2006)

  12. 12.

    Duval-Hernández, R., Fields, G.S., Jakubson, G.H.: Changing Income Inequality and Panel Income Changes in Times of Economic Growth and Economic Decline, unpublished manuscript (2014)

  13. 13.

    Fields, G.S., Duval-Hernández, R., Freije, S., Sánchez Puerta, M.L.: Intragenerational income mobility in Latin America. Economía 7 (2), 101–143 (2007)

    Article  Google Scholar 

  14. 14.

    Fields, G.S., Sánchez Puerta, M.L.: Earnings mobility in times of growth and decline: Argentina from 1996 to 2003. World Dev. 38 (9), 870–880 (2010)

    Article  Google Scholar 

  15. 15.

    Furceri, D.: β and σ convergence: A mathematical relation of causality. Econ. Lett. 89, 212–215 (2005)

    Article  Google Scholar 

  16. 16.

    Gasparini, L., Lustig, N.: The rise and fall of income inequality in Latin America. In: Ocampo, J.A., Ros, J. (eds.) Oxford Handbook of Latin American Economics. Oxford University Press, Oxford (2011)

    Google Scholar 

  17. 17.

    Glewwe, P.: How Much of Observed Economic Mobility is Measurement Error? IV Methods to Reduce Measurement Error Bias, with an Application to Vietnam.World Bank Econ Rev 26(2), 236–264 (2010)

  18. 18.

    Gottschalk, P.: Earnings mobility: Permanent change or transitory fluctuations? Rev. Econ. Stat. 64 (3), 450–456 (1982)

    Article  Google Scholar 

  19. 19.

    Gottschalk, P., Huynh, M.: Are earnings inequality and mobility overstated? The impact of nonclassical measurement error. Rev. Econ. Stat. 92 (2), 302–315 (2010)

    Article  Google Scholar 

  20. 20.

    Grimm, M.: Removing the anonymity axiom in assessing pro-poor growth. J. Econ. Inequal. 5 (2), 179–197 (2007)

    Article  Google Scholar 

  21. 21.

    Jäntti, M., Jenkins, S.P.: Income Mobility. In: Atkinson, A.B., Bourguignon, F. (eds.) Handbook of Income Distribution, Vol. 2. Elsevier, Amsterdam (forthcoming)

  22. 22.

    Krebs, T., Krishna, P., Maloney, W.F.: Income Risk, Income Mobility and Welfare IZA Discussion Paper No 7056 (2012)

  23. 23.

    Kuznets, S.: Economic growth and income inequality. Am. Econ. Rev. XLV (March), 1–28 (1955)

    Google Scholar 

  24. 24.

    Meade, J.E.: The Just Economy. Allen and Unwin, London (1976)

    Google Scholar 

  25. 25.

    Merton, R.E.: The Matthew effect in science. Science, 159 (1968)

  26. 26.

    Moffitt, R.A., Gottschalk, P.: Trends in the transitory variance of earnings in the United States. Econ. J. 112 (March), C68–C73 (2002)

    Article  Google Scholar 

  27. 27.

    Palmisano, F., Peragine, V.: The distributional incidence of growth: A social welfare approach. Rev. Income Wealth (2014)

  28. 28.

    Ravallion, M.: Pro-Poor Growth: A Primer. World Bank Policy Research Working Paper 3242 (2004)

  29. 29.

    Ravallion, M.: A Comparative Perspective on Poverty Reduction in Brazil, China and India. World Bank Policy Research Working Paper 5080 (2009)

  30. 30.

    Sánchez Puerta, M.L.: Earnings Mobility in Urban Argentina. Ph.D. dissertation. Cornell University (2005)

  31. 31.

    Wodon, Q., Yitzhaki, S.: Convergence forward and backward? Econ. Lett. 92, 47–51 (2006)

    Article  Google Scholar 

Download references


We would like to acknowledge the valuable comments of two anonymous referees and the Editor of this journal. Also, we would like to thank Yang Song and David Jaume for excellent research assistance.

Author information



Corresponding author

Correspondence to Gary S. Fields.

Electronic supplementary material

Below is the link to the electronic supplementary material.

(DOC 1.23 MB)

Rights and permissions

Reprints and Permissions

About this article

Verify currency and authenticity via CrossMark

Cite this article

Fields, G.S., Duval-Hernández, R., Freije, S. et al. Earnings mobility, inequality, and economic growth in Argentina, Mexico, and Venezuela. J Econ Inequal 13, 103–128 (2015).

Download citation


  • Earnings mobility
  • Income convergence
  • Latin America