Econometric analysis of income mobility and wage growth

My dissertation consists in three empirical studies on income mobility and wage growth. In the first chapter I compare short run income mobility between the North and South of Italy. Using the panel of the Survey on Household Income and Wealth for the period 2004-2008, I show that individuals from the South face a worse income dynamic than those from the North even when accounting for age and education. I use a nonparametric one-sided test for comparing conditional transition probabilities with a continuous covariate. The test is based on covariate matching techniques, does not assume any functional form for the dependence of the transition probability on the covariate, allows for different sample design and has a pivotal distribution. In the second chapter I use Italian administrative data to study the effect of adverse labor market entry conditions on wage mobility of young males. I compare wage transition matrices between individuals who entered the labor market in the higher unemployment period 1986-1988 and those who entered in the lower unemployment period 1990-1992. I use a nonparametric testing procedure. I find that individuals who enter during the high unemployment period face a worse long run income mobility and in particular have signifficantly lower probabilities of reaching the top class of the wage distribution. I argue that Italy has a static labor market with a high cost of changing job. This reduces the opportunity of individuals to improve their working status, leading to a negative persistent effect of adverse entry conditions. In the third chapter I investigate the returns to internal migration for Italian young males. Using Italian administrative data I find a signifficant positive effect on wage growth in the first eleven years of career when individuals migrate towards North in the first five years of career. On the other hand I find a signifficant negative effect on the wage of the first year following migration when the destination is South. I show that it is essential to consider the destination and the timing when studying returns to migration.Programa Oficial de Doctorado en EconomíaPresidente: Carlos Velasco Gómez; Secretario: Laura Hospido Quintana; Vocal: Raquel Llorente Hera