The Econmist - USA (2021-11-06)

TheEconomistNovember6th 2021 BriefingSocialmobilityinAmerica 19

to50%(seechartonthenextpage).
Thatremarkabledropisdowntoa few
long­runningtrends,especiallytheemer­
genceofeducationasthedifferentiatorbe­
tweeneconomicprecarityandsuccess.Na­
tionalstatistics showthatworkerswith
collegedegreesnowhaverealwages86%
higher than those of workers without.
Whatismore,thosewithouta degreehave
seenlittleincreaseinrealwagessince1979.
Manyless­educatedmenhavedropped
outofthelabourforce.In 2016 “onlyone­
in­twoless­skilledmeninruralAmerica
worked,whichwas 15 percentagepoints
lowerthaninmetroareas,”writesJames
Ziliak,aneconomistattheUniversityof
Kentucky.Realwagesthathavenotbudged
andlowerwork­force participationhave
gonehandinhandwithillhealth,which
worsensoutcomesfurther.AnneCaseand
AngusDeatonofPrincetonUniversityre­
centlypublishedresearchshowingthatthe
life expectancy ofAmericans without a
bachelor’sdegreeisfalling.
Ontopofthisprecipitousdeclineinab­
solutemobilitytherehavealsobeenlosses
inrelativemobility,a measurecomparing
children’spositionintheincomedistribu­
tionwiththatoftheirparents.Consider
thechancefora childborntoparentsinthe
bottomfifthoftheincomedistributionto
makeittothetopfifth.Ina societywhere
originsdidnotmatteronewouldexpect
thelikelihoodofsucha ragstorichesas­
centtobeclosetorandomchance,or20%.
InAmericathechanceisjust7.5%.
Comparisons with other countries
make this look particularly pernicious.
Thelandofopportunityisbadlyoutpaced
byEuropeanwelfarestatessuchasBritain,
FranceandSweden(wherethechanceis
above11%)andalsobyCanada.

Intergenerationaldisadvantageisespe­

ciallystarkforblackAmericans—theyhave

onlyhalfasgooda chanceofescapingfrom

thebottomfifthaspoorwhitesdo.Onein

five black Americans is from a family

whichhasbeenmiredinthebottomfifth

ofincomedistributionforthreegenera­

tions;forwhitesit isjustoneina hundred.

Thosebornrichin America,by con­

trast,aremuchlikelierto stayrichthan

theircounterpartsinotheradvancedcoun­

tries.Theirchildrenseehigherincomes,

too.Hereditarypersistenceinincomesisa

measure ofhow much you can predict

about two people’sincomes based ona

comparisonofwhattheirfathersearned.

BhashMazumder,aneconomistattheFed­

eral ReserveBank ofChicago,calculates

thatifanAmerican’sfathermadetwiceas

muchashisneighbour’sfather,thenhe

wouldbeexpectedtomake60%morethan

hisneighbour.Thatismuchhigherthanif

theywereFrench(41%),German(32%) or

Danish(15%),thoughlessthanif theywere

Brazilians(70%).

Wegottagetoutwhilewe’reyoung

Becausechildrenmustgrowupandenter

thelabourmarketbeforetheirrelativeper­

formancecan be assessed,findings like

these are inevitably backwards looking;

themostrecentdataprovidedbystudiesof

intergenerational mobility come from

adultsborninthe1980sandenteringthe

labourmarketinthe2000s.Fewexperts,

though,imaginethatthetrendtolowerso­

cialmobilitywillturnouttohavereversed

forlatercohorts.Atbestitmayhavepla­

teaued;it couldwellhaveworsened.

Thereturnstohighereducation—and,

conversely, thepenaltiesforlow educa­

tion—show littlesignof declining.And

highly educated people are likely to be

marriedtoeachother,toraisechildrenin

stable marriages, to live near excellent

schoolsandtoinvesta lotinsupplement­

ingtheirchildren’seducation.MilesCo­

rak,anexpertonsocialmobility,argues

thatrisinginequalityalongthesedimen­

sions“willmostlikelylowerthedegreeof

intergenerational earnings mobility for

thenextgenerationofAmericanscoming

ofageina morepolarisedlabourmarket”.

Onewayoftryingtoseewhetherthings

aremerelybadorgettingworseistolook

fora leadingindicatorofsocialmobility.

Someeconomiststhinkthatthiscanbe

providedbyinequalitylevels,thoughthe

matterisfarfromsettled.A chartknownas

theGreatGatsbycurveshowsanempirical

link, with countries where income in­

equalityishighgoingontohavelowrates

ofsocialmobility.Thesamepatternhas

beenobservedwithinAmerica,too.States

withhighlevelsofinequality alsohave

worsemobilityoutcomes.

Themostinnovativerecentresearchon

this comes from Raj Chetty, Nathaniel

Hendren, Patrick Kline and Emmanuel

Saez.Theyuseddatafrommillionsoftax

returnstoproducea high­resolutionim­

ageofmobilityoutcomes(seemap).This

uncoveredwidevariationwithincities;the

amountofsocialmobilitycandependon

the neighbourhood, or even the block,

wherepeoplelive.Butit remainedinverse­

ly related to inequality. Other factors—

suchasmorestablefamilystructure,bet­

terschools,lowersegregation—werecor­

relatedwithhigherupwardmobility.

Inequality is,unsurprisingly,particu­

larlypersistentamongblackAmericans.In

September the Census Bureau reported

thatthetypicalincomeforwhitehouse­

holds in 2020 was61% higherthan for

blackhouseholds—agapwhichhasbarely

changedsince1967,whenthedataseries

began.Theblack­whitewealthgapisun­

changedaswell,ata ratioofonetoten.

Iftherelationshipbetweeninequality

andsocialmobilityiscausal,ratherthan

justcorrelational,itaugursillfortoday’s

youngAmericans.Since 1989 theFederal

Reservehasputoutquarterlydataonthe

distributionofnationalwealth.Itsmost

recentrelease,forthesecondquarterof

2021,showedforthefirsttimethatthetop

1%ofearners heldmorewealththanthe

middle60%.DatafromtheCongressional

BudgetOfficeshowthattheshareofna­

tionalincometakenhomebythemiddle

60%ofearnersinAmericahasfallen,and

thattakenbythetop20%ofearnershas

risen.In 1979 themiddle60%tookhome

50.8%,aftertaxesandtransfers.In 2018

thatsharehadfallento45.1%—andthetop

20%hadgoneupto49%ofthetake.

Nocountrycanrealistically aspireto

theabsoluteequalityofopportunitythat

wouldliftsocialmobilitytoitstheoretical

Source:opportunityatlas.org *Bottomquartile †Basedonhouseholdincomeatage35,forallchildrenborn, 2014-

Go mid-west, young man

Adult outcomes for children born to low-income parents*

By commuting zone

Share in top 2% of national income, % of total†

3 5 7 11

Median

.   

13 15 20 30