The drivers of income mobility in Europe

- We provide an extensive comparative analysis of short-term intragenerational income mobility across Europe.
- We emphasise the role of institutional factors by classifying European countries into different models of capitalism.
- The analysis reveals high heterogeneity in income volatility across Europe and models of capitalism.
- The absolute and relative importance of the microeconomic drivers of mobility strongly depends on the institutional setting.

In this paper we study short-term income mobility in European countries over the years preceding the outburst of the global crisis. Income mobility plays a crucial role in shaping distributive patterns and is closely related to the capacity of a socio-economic system to provide equality of opportunities and the removal of social impediments. In this study we exploit the longitudinal structure of the EU-SILC database to provide a comprehensive overview of intragenerational mobility from 2004 to 2006 across 25 European countries, classified into six capitalistic models. After having descriptively analysed heterogeneity in income dynamics by means of alternative measures, we identify the microeconomic drivers of household income mobility, focusing on the role of demographic, economic and job characteristics. The outcomes reveal that the levels and determinants of short-term mobility differ remarkably in the various institutional models across Europe, particularly regarding household composition, demographic attributes, education levels and job positions.