largely restricted to the lower three earnings intervals. That is, over the
bottom two earnings intervals it appears that an economic recession is
associated with a higher probability of staying (or reduced degree of earnings
mobility), a lower probability of moving up, and an enhanced probability of
moving down the distribution. The opposite occurs during an economic
expansion. This cyclical pattern is also more clear-cut for men’s earnings than
for women’s.
To better see the more salient patterns of dynamic distributional change,
however, it is useful to summarize some of the main features of the transition
matrices to a smaller and more manageable set of mobility statistics. This is
done in Table 8. Here the detailed probabilities of moving up or moving down
are summed across each row in the transition matrix. Then the Avg. Prob. of
Moving Up is the (simple) average of the six probabilities of moving up across
all six earnings intervals in a distribution. Similarly, the Avg. Prob. of Moving
Down is the average of the probabilities of moving down across all the
earnings intervals. The Avg. Net Prob. of Moving Up is the difference
between the former and the latter. Finally, if avg. Pr(S) is the average of the
probabilities of staying (expressed as percentages) across all six earnings
intervals in a distribution, then
Avg. Mobility = 100 - avg. Pr(S).
Figures on these average probabilities (all expressed as percentages) are
presented in Table 8 for the full sample period as well as for the transition
between 1987 and 1988 (years of strong economic expansion) and between
1990 and 1991 (years of relatively severe recession). Looking at the average
one-year transitions over the full sample period, one sees that average
mobility of earnings is substantially higher for men than for women by about
seven percentage points. The average probability of moving up is also
substantially higher for men than for women — by 7.5 percentage points.
The average probability of moving down is only slightly lower for men than
for women — by less than one percentage point. But all the average moving
down probabilities are less than the average moving up probabilities — indeed
about half the size in the case of men and three-quarters the size for women.
So the average net probabilities of moving up are also all positive — about
12-13 per cent over the sample period for men and about 4 per cent for
women. So the average net probability of moving up is also substantially
472
Charles M. Beach and Ross Finnie