Income Mobility in Ecuador. New Evidence from Personal Income Tax Returns

Abstract

This paper provides new evidence on the study of income mobility in Ecuador over the 2004-2011 period. We use longitudinal data of individual income tax returns to measure income mobility both at the top and middle of the income distribution. We found three main empirical results: first, income mobility in Ecuador is low for top incomes, the probability of remaining in the top 1% after one year is nearly 65%. Second, there is an important degree of mobility in the rest of the income distribution. Individuals are more likely to experience upward mobility than downward mobility, especially those in the middle-income deciles. Third, regression results suggest that having a high school degree is associated with upward income movements.