This paper provides an explicit welfare basis for evaluating economic mobility. Our social welfare function can be seen as a natural dynamic extension of the static social welfare function presented in Atkinson and Bourguignon (1982). Unlike Atkinson and Bourguignon, we use social preferences a...

We derive the efficiency loss from using grouped data to estimate coefficients of variables that vary across groups but not individuals within a group (e.g., state unemployment rates) when micro data are unavailable on the dependent variable. We present an empirical example of our theoretical...

Wage cuts are often presumed to reflect an adverse change in economic constraints. However, several theoretical models have shown they can be a form of investment in future wage growth. This paper provides empirical evidence of the latter by explicitly modeling the worker's job choice when the...