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11/1/16

US Economy: Upward mobility eludes many in US - by Evan Horowitz

To reach the fabled land of opportunity, you may have to move. The odds of a low-income kid clawing his way up are better in Seattle than they are in Boston.

Crossing an ocean might help even more, since the make-your-own-success promise of the American dream turns out to be more true in Denmark than the United States.

But if you really want to find a place of equal opportunity, where hard work brings real rewards and your life prospects aren’t constrained by the size of your parents’ paychecks, leaving home may not be enough. You might have to find a time machine. Research suggests that your chance of success isn’t just determined by your parents, but by the long-forgotten fortunes of your distant ancestors.

Pick yourself up by your bootstraps? Only if your parents, grandparents, and great-great-great-grandparents already did.

Let’s be clear what we’re talking about, because there are several definitions of mobility. I’m talking about relative mobility, or how common it is for people to climb to a higher rung on the income ladder than their parents did (or, less glamorously, fall to a lower one).

Foundational myths aside, there really isn’t a lot of mobility in the United States — at least judging from the work of Stanford University professor Raj Chetty and his team at the Equality of Opportunity project.

Children born into the poorest 20 percent of households have about 33 percent chance of staying there, they calculate, and only a 7.5 percent chance of cracking the top 20 percent.

Among the rich, it’s reversed. In a perfectly mobile world, it wouldn’t matter where you started on the income ladder; even if your parents were among the top 1 percent, you’d still have a 1 in 100 chance of ending up in that rarefied group, just like everyone else. But in reality, Chetty’s research found, your odds are 10 times better than that.

Even within the United States there are some big differences. For instance, kids across the West have a much better shot at improving their lot than those in the South.

Scan the globe and you can do even better. Compared to their US peers, poor kids in Canada are nearly twice as likely to find their way to the top. In Denmark, the numbers aren’t quite so good, but Danish kids still enjoy more upward mobility than ours do.

When scholars from Northwestern University, the University of Michigan, and the Census Bureau added a third generation to their measure of economic mobility, they found that the US economy was even less fluid than presumed. Studies that focus narrowly on parents and children, without attending to grandparents, underestimate social rigidity by a substantial amount.

Pause over that for a second, because it constitutes a huge challenge to our whole conception of economic mobility — more specifically, the idea that ours is not a rigidly hierarchical society because even small changes add up over time.

The argument usually goes something like this: Sure, the children of low-income parents have a reduced chance of moving up the income ladder, but they have some chance. And the ones who don’t make it will have their own children, with a new opportunity to move up. So after a few generations, virtually all scions of those once-poor families should have escaped.

But this won’t happen if grandchildren have a tendency to snap back.

One generation goes up, the next falls back down, and the whole system ends up in the same position as before.

What accounts for these differences? Chetty and his colleagues isolated a number of factors, though they’re careful to insist they don’t yet understand the full causal picture. Among other things, it seems that good schools help to develop essential skills, strong families provide valuable support, low inequality levels the field, and low rates of segregation aid both whites and blacks.

Put a few of these together and you can turn cities and countries into superior engines of opportunity.

The very fact that mobility rates vary from place to place suggests we can probably do something to expand opportunity. By following the example of higher-mobility regions like the Pacific Northwest or Northern Europe, we might be able to widen the avenues for poorer kids. And the better news is that the required changes are already high political priorities, things like improving schools and reducing inequality.

But if Clark is right, and family success persists across centuries, perhaps policy is beside the point. There seems to be a broader law at work, something that keeps the successful on top and the poor close to the bottom — regardless of school funding levels or divorce rates.

Clark raises a genetic argument, suggesting that families like the Pepys have some traits essential for success — grit, ambition, high IQ — that get passed down and provide each generation a substantial advantage.

But even if you don’t accept that claim, it doesn’t change the puzzle. In a world where 21st-century success is bound up with 17th-century happenings, the idea of economic opportunity starts to sound like a farce.

Perhaps the only thing to do is rewrite our economic rules so that everyone can find some real well-being, even if opportunity was mostly closed to them hundreds of years ago.

To read the complete report click here:: Upward mobility eludes many in US - The Boston Globe

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