Chapter

Transitory Variation and Volatility in Income

Stephen P. Jenkins

in Changing Fortunes

Published in print July 2011 | ISBN: 9780199226436
Published online September 2011 | e-ISBN: 9780191728457 | DOI: http://dx.doi.org/10.1093/acprof:oso/9780199226436.003.0006
Transitory Variation and Volatility in Income

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This chapter examines mobility from the perspective of income risk, defined in terms of what economists have labelled the transitory variance of income and income volatility. These measures have received a great deal of recent attention in research about the USA. It is shown that, although US measures have trended upwards over the last two decades, there is no such trend in the UK. Given the changes in the macro-economy and the tax-benefit system described earlier in this book, this finding is surprising. Further analysis suggests that the explanation is not that there is no change at all; rather there are increases in longitudinal variability for some income sources (for example income from benefits and tax credits) that are offset by decreases in variability for other sources.

Keywords: income mobility; income risk; income volatility; transitory variance

Chapter.  12371 words.  Illustrated.

Subjects: Financial Markets

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