Chetty and Saez’s new study, “Is the United States Still a Land of Opportunity? Recent Trends in the Intergenerational Mobility,”
debunks the notion that income mobility in the U.S. has declined. They conclude, “Contrary to the popular perception, we find that percentile rank-based measures of intergenerational mobility have remained extremely stable for the 1971-1993 birth cohorts.” In fact, “the probability that a child from a low-income family (e.g., the bottom 20%) reaches a fixed upper income threshold (e.g., $100,000)…has increased,” as has the probability of low-income children attending college. They go on, “Putting together our results with evidence from Hertz (“Trends in the Intergenerational Elasticity of Family Income in the United States,” 2007) and Lee and Solon (“Trends in Intergenerational Income Mobility,” 2009) that intergenerational mobility did not change significantly between the 1950 and 1970 birth cohorts, we conclude that rank-based measures of social mobility have remained stable over the second half of the twentieth century in the United States…If anything, intergenerational mobility may have increased slightly in recent cohorts.
The authors claim that income mobility in the U.S. is “significantly lower” than in other developed countries. But studies show income inequality is predominantly the same in the U.S. as other developed countries except for the poorest children, even when compared to countries like Denmark that have high income equality.
A companion paper by Chetty and Saez, “Where is the Land of Opportunity? The Geography of Intergenerational Mobility in the United States,” provides an explanation for why relative mobility is so low in the lowest quintile of income. The papers supports the conservative view that the culture of poverty in America, which includes high incidents of: unwed motherhood, high school drop outs, criminality, and other harmful factors, hurts children and makes it much harder for them to climb out of poverty.
Their analysis debunks Kruger’s “Great Gatsby Curve,” which claims rising income inequality has reduced mobility. Chetty and Saez show that the success of the 1%, the primary driver of rising income inequality, has little if any effect on mobility. Instead, Chetty and Saez’s analysis indicates that declines in the income of the poor relative to the middle class hurts the mobility of poor children. Other studies, such as Chulhee Lee’s 2005 paper, “Rising Family Inequality in the United States, 1968 to 2000: Impacts of Changing Labor Supply, Wages and Family Structure,” shows that the declines in the income of the poor relative to the middle class stems largely from a reduction in hours worked by the poor.