American Children’s Chances Of Making More Than Their Parents Haven’t Improved In Two Decades

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"American Children’s Chances Of Making More Than Their Parents Haven’t Improved In Two Decades"

income inequality

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Economic mobility in the United States has stayed flat for two decades, neither improving or declining, according to a new paper by Raj Chetty, Emmanuel Saez, and others.

For example, the chance that a child born into the bottom fifth of income distribution will reach the top fifth as an adult was 8.4 percent for those born in 1971 and was still just 9 percent for kids born in 1986. Children born into the middle fifth have had about a 20 percent chance of reaching the top fifth over the last decade.

While the paper disproves the idea that mobility has declined, it still presents a worrying trend. As mobility has stayed stagnant, income inequality has been on the rise, making a child’s starting position even more important. “[T]he consequences of the ‘birth lottery’ – the parents to whom a child is born – are larger today than in the past,” the authors write. If social mobility is a ladder, this means “the rungs of the ladder have grown further apart (inequality has increased), but children’s chances of climbing from lower to higher rungs have not changed.”

A second paper by the same authors finds that mobility varies significantly depending on where in the country a child is born. They point to cities like Salt Lake City, UT and San Jose, CA as places where mobility is as high as in countries that rank highest, such as Denmark. Others, like Atlanta and Milwaukee, have lower rates than any developed country.

Lighter colors represent areas where children from low-income families are more likely to move up in the income distribution.

Lighter colors represent areas where children from low-income families are more likely to move up in the income distribution.

CREDIT: Chetty, Saez, et al.

On the whole, the researchers report that intergenerational mobility is “significantly lower” here than in most other developed countries. The chances of a child moving out of poverty are about half as high in the U.S. as in Denmark. A third of those who grow up in America’s top 1 percent will make $100,000 by the age of 30, but just one out of every 25 people who grow up in the bottom of half of income distribution will pull off the same.

Other research has found that economic mobility depends heavily on geography, and in particular, that areas with strong middle classes have higher rates. Places with lower and less progressive state income taxes, on the other hand, have lower rates of mobility.

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