Income mobility in France between 2003 and 2020

How do individual positions in the income distribution change over life ? So far, it has proven difficult to answer this question in the absence of a long-term income panel, but new longitudinal income tax records from 2003 to 2020 now enable to analyze the long-term income mobility, as well as its impact on inequality measurement over the whole period.

We find a high rank-rank correlation of 0.71 between 2003-2004 and 2019-2020 for those age 25-49 in 2003. Inertia is particularly strong at the top and the bottom of the distribution: among the top 20% and the bottom 20% of the income distribution, almost two-thirds remain in the same quintile 16 years later. Mobility appears to be lower in France than in the United States. However, mobility is higher for the self-employed than for employees, and the young are also more mobile. Inhabitants of the largest areas persist more at the top of the distribution and experience more upward mobility. These results are robust to the income definition considered.

Moreover, taking individual mobility into account when measuring income inequality hardly differs from income inequality as conventionally measured: a Gini index based on average individual income over the period is 7% lower than the Gini index based on annual income.