Economic mobility in America: relatively constant, but more consequential than ever
U.S. economic mobility — the chances of moving up or down the income scale — has been relatively unchanged over last 20 years. That’s the conclusion of a new study by a team of economists led by Harvard’s Raj Chetty, who find that “intergenerational mobility [has] remained extremely stable” for Americans born between 1971 and 1993. The NYT’s David Leonhardt explains:
The study found, for instance, that about 8 percent of children born in the early 1980s who grew up in families in the bottom fifth of the income distribution managed to reach the top fifth for their age group today. The rate was nearly identical for children born a decade earlier.
Combining these findings with earlier research on Americans born between 1950 and 1971, the economists conclude that “rank-based measures of social mobility have remained stable over the second half of the twentieth century in the United States”. The researchers chart that stability, along with a map showing how economic mobility varies across the United States:
A crucial point made by the study is that while mobility has been steady, inequality has been rising. And that has big consequences for the role luck plays in economic outcomes:
The “consequences of the ‘birth lottery’ – the parents to whom a child is born – are larger today than in the past. A useful visual analogy (shown in the figure below) is to envision the income distribution as a ladder, with each percentile representing a different rung. 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 (rank-based mobility has remained stable).”
Put more succinctly by economist Justin Wolfers: “kids, more than ever, be careful to choose the right parents”. As inequality rises, the payouts from the birth lottery become more dispersed: greater at the highest income level and lesser and the lowest income level. The current members of the lucky sperm club are, it seems, more lucky than their predecessors.
Another reason to be worried: America’s level of economic mobility is much lower than other rich nations. One of the study’s authors, UC Berkeley’s Emmanuel Saez said, “the level of opportunity is alarming, even though it’s stable over time”. The Washington Post’s Jim Tankersley points out that “it is much harder for a poor child born in America to climb into the rare air of the country’s highest earners than it is for a similar child in, for example, Canada or Denmark”.