Suppose you live in a society with perfect income mobility. This implies that: the income of one's parents has no influence over one's place in the income distribution in adulthood. the probability of ending up in the 90th percentile of the income distribution is higher than the probability of ending up in the 10th percentile of the income distribution. the Gini coefficient is 1.

Question

Quizplus · Accepted Answer

Perfect income mobility means that an individual's income or economic position is not determined by their parents' income, making statement I correct. Statement II is incorrect because perfect income mobility would imply equal probability of ending up in any part of the income distribution, not a higher probability for the 90th percentile. Statement III is incorrect because a Gini coefficient of 1 indicates perfect inequality, whereas perfect income mobility would be associated with a more equal distribution, potentially a Gini coefficient closer to 0.

Suppose You Live in a Society with Perfect Income Mobility