Measuring Income Mobility with Dirty Data (published in Ethnic and Racial Studies, 22(3), May 1999)

Frank A Cowell and Christian Schluter

Published November 1998

We examine the performance of measures of mobility when allowance is made for the possibility of data contamination. We find that 'single-stage' indices - those that are applied directly to a sample from a multivariate income distribution - usually prove to be non-robust in the face of contamination. However, 'two-stage' models of mobility - where the distribution is first 'discretised' into income intervals and then a transition matrix or other tool is applied - may be robust if the first stage is appropriately specified.