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Kanton ZürichStatistisches Amt
Income Mobility in the Canton ofZurich - a NovelUse of Tax DataDr. Peter Moser
Presentation at the Swiss Statistics Meeting 2013 in Basle
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� Equality of opportunity defines a modern democraticsociety
� Equality of opportunity implies social mobility amongits members, an absence of a rigidly hierachical class system(eg. the feudal system of the Middle Ages)
� The degree of social mobility in a society indicates theactual degree of equality of opportunity
� Two different concepts: intergenerational social mobility
(changes in the status of the members of different generationsof a family group) and intragenerational mobility
� Income mobility (∆ income t1 - t0) is an important aspectof intragenerational social mobility, because income iscentral to the notion of social status
Income Mobility - Why Is It Important?
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� Federal income tax returns from the Canton of Zurich
� each year from 1999 to 2010 individual data for all ordinary tax subjects.
� Variables: taxable income, tax rate used (Singles and families - a proxy for household structure), age of taxpayer (proxy for the positionof the household in the life cycle), wealth
� and crucially : a key variable connecting units of taxation
over time (pseudonymized social security number) …
� … and thus allowing for the generation of the panel data
required to analyze individual (or household) income mobility
� this gives us about half a million of complete cases (out of a total of 1.2 Mio) for a balanced panel during the ten years between 2001 und 2010
The Data: Income Tax Returns
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� Advantages
� lots and lots of cases for
free!
� trustworthy, verified income
data (as compared to surveydata)
� Data includes all sources of
income (e.g. not only wages)
� selective panel mortality
is not at big problem (withthe exception, obviously, of theelderly)
Tax Data: Advantages and Drawbacks
� Drawbacks
� almost no additional
information abouthouseholds (formation, earnings and wealth structureetc.)
� little explanation ofincome mobility is possible
� Tax law defines income,
not social science
� The key variable refers toan individual, the unit ishowever a household
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� life-cycle of absolute income
change expectations over a ten year horizon
� High absolute gains among
young (single) households
� Turning point at about 50, incomes ten years hence areusually lower than incomes now
� Looming retirement implies
lower incomes
� (Nominally) more or lessconstant incomes after
retirement
� Different income trajectory
for multiperson-households!
Absolute Income Mobility in the Life Cycle
Age (2001)
Med
ian
Inco
me
Diff
eren
ce 2
001-
2010
-200
00-1
0000
010
000
2000
030
000
25 30 35 40 45 50 55 60 65 70 75
Type of HouseholdSingleMultiple Persons
Single- > MultipleMultiple- > Single
Total
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Absolute Income Mobility by Age & Income Class
age (2001)
med
ian
abso
lute
inco
me
diffe
renc
e (r
eal)
20
01-2
010
-600
00-4
0000
-200
000
2000
040
000
25-2
9
30-3
4
35-3
9
40-4
4
45-4
9
50-5
4
55-5
9
60-6
4
1. quintile 2001 (-36K)
25-2
9
30-3
4
35-3
9
40-4
4
45-4
9
50-5
4
55-5
9
60-6
4
2. quintile 2001 (36-54K)
25-2
9
30-3
4
35-3
9
40-4
4
45-4
9
50-5
4
55-5
9
60-6
4
3. quintile 2001 (54-72K)
25-2
9
30-3
4
35-3
9
40-4
4
45-4
9
50-5
4
55-5
9
60-6
4
4. quintile 2001 (72-102K)
25-2
9
30-3
4
35-3
9
40-4
4
45-4
9
50-5
4
55-5
9
60-6
4
5. quintile 2001 (102+K)
household typesinglemulti-person
single- > multimulti- > single
total
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Relative Mobility: a Quantile-Mobility-Matrix
� Relative (Quantile) income
mobility 2001 to 2010, Downwardsmovement = upward movement
� Diagonal orientation: Past incomerank predicts future ranking rather well
� 28% are staying in the same
decile after ten years
� 72 % of households have some
relative income mobility.
However, about half of them only moveinto an adjacent Decile
� 3% of those in the bottom
decile move to the top decile
� There is income mobility - but asexpected it is also limited, especiallyin the corner deciles (Q1, Q10)
Q1:
0-1
9K
Q2:
19-
35K
Q3:
35-
46K
Q4:
46-
55K
Q5:
55-
64K
Q6:
64-
74K
Q7:
74-
87K
Q8:
87-
107K
Q9:
107
-146
K
Q10
: 146
K+
Q10: 137K+
Q9: 102-137K
Q8: 84-102K
Q7: 72-84K
Q6: 63-72K
Q5: 54-63K
Q4: 46-54K
Q3: 36-46K
Q2: 21-36K
Q1: 0-20K 43
19
10
7
5
4
4
3
3
3
19
29
17
11
8
6
4
3
2
2
10
19
23
16
11
8
6
4
3
1
6
11
18
20
15
11
8
5
3
2
5
7
12
17
19
15
11
7
5
2
4
5
8
11
17
19
16
11
7
3
4
4
5
8
12
16
19
17
11
4
3
3
4
5
8
11
17
22
19
8
3
2
2
3
5
7
10
18
29
20
3
1
1
2
2
3
5
8
18
56
2001
2010
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Relative Mobility by Age & Income
age (2001)
shar
e of
mob
ile h
ouse
hold
s (m
ovin
g ou
t of s
tarti
ng q
uint
ile) i
n %
2040
6080
25-2
9
30-3
4
35-3
9
40-4
4
45-4
9
50-5
4
55-5
9
60-6
4
1. quintile 2001 (-36K)
25-2
9
30-3
4
35-3
9
40-4
4
45-4
9
50-5
4
55-5
9
60-6
4
2. quintile 2001 (36-54K)
25-2
9
30-3
4
35-3
9
40-4
4
45-4
9
50-5
4
55-5
9
60-6
4
3. quintile 2001 (54-72K)
25-2
9
30-3
4
35-3
9
40-4
4
45-4
9
50-5
4
55-5
9
60-6
4
4. quintile 2001 (72-102K)
25-2
9
30-3
4
35-3
9
40-4
4
45-4
9
50-5
4
55-5
9
60-6
4
5. quintile 2001 (102+K)
household typessinglemulti-person
single > multimulti > single
total
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Relative Mobility Within Age Groups� income mobility (relative and
absolute) is influenced by thenormal financial life-cycle of a household
� But: How important is it for
total income mobility?
� Mobility between age groups vs. Mobility within age groups
� Mobility within age groups ishigher among the young andlowest among the retired
� But it is not very much lower
than overall mobility
� Total income mobility is
mostly „real“ and not merely an artifact of the financial life-cycle
age (2001)
inco
me
mob
ility
(1-S
pear
man
s R
ho)
0.2
0.4
0.6
0.8
20 25 30 35 40 45 50 55 60 65 70 75
household typessinglemulti-person
single > multimulti > single
total
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Income Mobility Among the Top Earners� Income mobility at the top
matters: Money is power, renewal of
elites essential in a democracy
� 47% of households in the top 1%
(400KFr+) in 2001 are still there ten
years later and 38% of those in thetop 0.1% (1.5MFr+)
� 25 % of households in the top 1%
remain there during every one of
those ten years and 19% of thosein the top 0.1%
� There is renewal - but also persistence at the top; the more (orless) the thinner the income slice.
� Persistence depends on age (nextslide)
.. Top 10% .. Top 1% ... Top 0.1%
Per
cent
age
Sha
re o
f tho
se w
ho a
re 2
001
in th
e re
spec
tive
Inco
me
clas
s
050
100
150
200
100
150
200
250
300
2001 und 2010 among the ..during the whole period among the ..at least once in the period among the ...
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Age and Persistence of Top Incomes
Top Incomes ...
Sha
re a
s %
1020
3040
5060
10% 1%
0.1%
1 Year
10%
1% 0.1%
..2..
10% 1%
0.1%
..3..
10%
1% 0.1%
..4..
10% 1%
0.1%
..5..
10%
1% 0.1%
..6..
10% 1%
0.1%
..7..
10%
1% 0.1%
..8..
10% 1%
0.1%
..9..
10%
1% 0.1%
10 Years
Age classified (2001)18-44-years old 45-64-years old 65+ years old
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� Is there a clear trend? I thinkthis must remain an open
question with only about a decade‘s worth of data
� Mobility at the very top, while volatile, seems to increaseslighty
� Income mobility increases
in periods of strong growth asinnovation opens up newopportunities for people toadvance financially (Internet-boom in 2000, financial boom in 2007)
Is Income Mobility Changing over Time?
Sh
are
of I
nco
me
mo
bile
ho
use
hold
s in
%
30
40
50
60
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Total1. Decile
10. Decile (Top 10%)Top 1%
Top 0.1%
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� Income mobillity in the Canton ofZurich is in the lower middle
range internationally
� Close to Germany, Austria,
France
� Income mobility is slightly lower
than in the US (as studies also based on Tax data show)
� International comparisons are
difficult due to data problems
� Income mobility seems to be
influenced by growth rates
(Booming Spain, Ireland?) egalitarianism (Denmark?)
Comparative Income Mobility
Share of mobile households in %
Dänemark
Irland
Spanien
Belgien
Grossbritannien
Griechenland
OECD-17
Niederlande
Italien
Frankreich
Österreich
Deutschland
Kanton Zürich
Portugal
Luxembourg
Finnland
25 30 35 40 45 50
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
2
9
1
7
3
5
8
4
10
13
11
12
6
14
16
15
2
3
7
1
4
6
5
12
8
14
9
13
15
16
11
10
Income Mobilitytotal 1. Quintile 5. Quintile
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Dr. Peter Moser Statistical Office of the Canton of ZurichSchöntalstrasse 58090 Zurich
Peter Moser: Wie durchlässig ist die Gesellschaft? Einkommensmobilität im Kanton Zürich 2001 bis 2010, statistik.info 2013/08
www.statistik.zh.ch/dam/justiz_innern/statistik/Publikationen/statistik_info/si_2013_08_einkommensmobilitaet.pdf
Thank You for Your Attention