Is the United States Still a Land of Opportunity? Recent Trends in Intergenerational Mobility

Abstract

We present new evidence on trends in intergenerational mobility in the U.S. using administrative earnings records. We find that percentile rank-based measures of intergenerational mobility have remained extremely stable for the 1971-1993 birth cohorts. For children born between 1971 and 1986, we measure intergenerational mobility based on the correlation between parent and child income percentile ranks. For more recent cohorts, we measure mobility as the correlation between a child's probability of attending college and her parents' income rank. We also calculate transition probabilities, such as a child's chances of reaching the top quintile of the income distribution starting from the bottom quintile. Based on all of these measures, we find that children entering the labor market today have the same chances of moving up in the income distribution (relative to their parents) as children born in the 1970s. However, because inequality has risen, the consequences of the "birth lottery" -the parents to whom a child is born -are larger today than in the past.

Where Credit is Due: The Relationship between Family Background and Credit Health

“…The most recent work, which relies on administrative income data, estimates that the current level of persistence is high relative to other countries but also generally unchanged from several decades ago (Lee and Solon, 2009;Chetty et al, 2014;Mitnik et al, 2015; and, for a review of prior work, Solon, 1999;Black and Devereux, 2011). Mitnik et al (2015) find that the correlation appears to be stronger when children's outcomes are observed later in their lifecycle (their 40s instead of their 30s), suggesting that the role of family background does not diminish over time and may even grow.…”

“…While equal access to opportunity is the cornerstone of the American Dream, socioeconomic status (SES) is highly correlated between parents and their children (Solon, 1999, Chetty et al, 2014. This persistence raises questions of whether individuals from different backgrounds can access the same opportunities, and, if not, where policy may help level the playing field.…”

Political and Policy Responses to Problems of Inequality and Opportunity: Past, Present, and Future

“…That Europe should be leading the charge in this respect, and that it should be the region with lower levels of inequality and higher rates of social mobility, is eye opening. Although recent evidence in the U.S. suggests that intergenerational mobility has not, in fact, declined alongside the increase in income inequality, the longer distance to travel from bottom to top has no doubt made upward strides more formidable (Bloome 2014 ;Chetty et al 2014 ). In contrast to conventional wisdom, Americans grasp this reality: They are at least as likely to recognize the unfair infl uence of social factors in getting ahead as Europeans, and their faith in the ability of hard work to prevail has been falling steadily over the past decade.…”

Using Information Regulation to Enhance Workplace Diversity, Inclusion, and Fairness

“…-in 2012, the top 10% of wage earners received more than half of the US's total income; the year saw the highest level of inequality ever recorded, resembling that of the "Gilded Age" preceding the Great Depression of the 1930s (Atkinson, Pikety & Saez 2011); -as the US economy slowly recovered from the Great Recession during 2009-14, the incomes of the top 1% of earners grew 31.4%, while that of the bottom 99% grew only 0.4% (Saez 2013); -the likelihood of intergenerational economic mobility -the chance that US children from lower-income families will achieve higher earnings than their parents -is substantially lower today than 40 years ago (Chetty et al 2014); -closure of long-standing US earnings gaps -for example, between women compared to men and people of colour compared to whites -has slowed and may even have reversed (Blau & Kahn 2006, Rodgers III & Holmes 2004.…”