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Nobel-Prize Winning Economist Dr. James Heckman on Social Mobility, the American Dream, and how COVID-19 Could Affect Inequality

Gonzalo Schwarz Medium

Date Posted:: April 24, 2020
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According to Dr. James Heckman, Family structure, not schools, drives social mobility. COVID impact: Pre-existing health gaps widen earnings inequality. Parent engagement quality during lockdowns emerges as key development factor.

Dr. James Heckman criticizes current research on inequality and mobility as shoddy, noting that it gains traction by appealing to negative societal views. He argues that evidence from IRS data and projects like "The Opportunity Atlas" is flawed, with careful analysis showing less disparity growth than reported. Heckman emphasizes the role of family structure in social mobility, stating that families, more than schools, shape children's opportunities. He highlights that public preschool benefits disadvantaged children but cannot replace the nurturing environment of a functional family. The COVID-19 crisis may exacerbate inequality in health and earnings, as those in poor health before the pandemic are most affected. Additionally, while increased parental engagement during school closures could benefit childhood development, disparities in engagement quality may lead to greater inequality.

Great quote from Heckman, "... The current research in the field is shoddy. It has gained traction because it appeals to the negative image of American society held by leading opinion makers like the New York Times and the Atlantic. In truth, the evidence based on the IRS data is deeply flawed and has been incorrectly analyzed. Take “The Opportunity Atlas” promoted by the New York Times. It claims that “zip code is destiny.” Careful statistical analysis of the data shows otherwise. The same can be said of the academics who write about the growth of the Top 1%. Careful studies show much less growth in disparity than what is picked up in the popular press and by populist politicians. A new “wisdom” has emerged: large samples more than compensate for faulty or missing data. The wisdom of this crowd is that sample size trumps careful data analysis....."
Gonzalo Schwarz, "Nobel-Prize Winning Economist Dr. James Heckman on Social Mobility, the American Dream, and how COVID-19 Could Affect Inequality, Medium, April 14, 2020, https://medium.com/@ArchbridgeInst/nobel-prize-winning-economist-dr-5550da1df5c3

Nobel-Prize Winning Economist Dr. James Heckman on Social Mobility, the American Dream, and how COVID-19 Could Affect Inequality

On April 14, 2020 Gonzalo Schwarz, President and CEO of the Archbridge Institute, conducted the following interview with Dr. James J. Heckman. Dr. Heckman is the Henry Schultz Distinguished Service Professor in Economics and the Director of the Center for the Economics of Human Development at the University of Chicago. In 2000, Heckman shared the Nobel Prize in Economics for his work on the microeconometrics of diversity and heterogeneity and for establishing a sound causal basis for public policy evaluation. For more on the work of Dr. Heckman, click here.

Gonzalo Schwarz: Many commentators have said that it is not possible to achieve the American Dream any more in the United States. Do you think the American Dream is alive and well?

Dr. James Heckman: Ask any immigrant. They are grateful for the chances that America has given them. Many came with nothing. They live in decent neighborhoods and their families have better lives than they could have before coming here. Their children go to college and integrate into American society. The progress of African Americans over the past century is staggering. Many have shaken off the legacies of poverty and discrimination. Those who deny that the American Dream is achievable ignore the myriad success stories and the mindset for personal growth that America offers.

S: When people talk about the American Dream they do so in the context of the current academic and policy discussion on income mobility and inequality. How would you characterize the current research in this field? What are some of the key issues with the literature and public discussions around these issues?

H: The current research in the field is shoddy. It has gained traction because it appeals to the negative image of American society held by leading opinion makers like the New York Times and the Atlantic. In truth, the evidence based on the IRS data is deeply flawed and has been incorrectly analyzed. Take “The Opportunity Atlas” promoted by the New York Times. It claims that “zip code is destiny.” Careful statistical analysis of the data shows otherwise. The same can be said of the academics who write about the growth of the Top 1%. Careful studies show much less growth in disparity than what is picked up in the popular press and by populist politicians. A new “wisdom” has emerged: large samples more than compensate for faulty or missing data. The wisdom of this crowd is that sample size trumps careful data analysis.

S: Without going into detail, what do you think are the main barriers to income or social mobility? (Could be micro level such as agency and family structure or on a bigger scale in terms of labor markets, entrepreneurship, etc.)

H: The main barriers to developing effective policies for income and social mobility is fear of honest engagement in the changes in the American family and the consequences it has wrought. It is politically incorrect to express the truth and go to the source of problems. Public discourse, such as it is, cannot speak honestly about matters of culture, race, and gender. Powerful censorship is at play across the entire society.

S: In your research you discuss the key importance of family structure for social mobility. Why do you feel so strongly about this issue?

H: The family is the source of life and growth. Families build values, encourage (or discourage) their children in school and out. Families — far more than schools — create or inhibit life opportunities. A huge body of evidence shows the powerful role of families in shaping the lives of their children. Dysfunctional families produce dysfunctional children. Schools can only partially compensate for the damage done to the children by dysfunctional families.

S: Your work on early childhood education is constantly cited as a justification for universal preschool education. Is that a policy you have recommended or what is your main focus and potential solution when you promote the importance of early childhood education?

H: I have never supported universal pre-school. The benefits of public preschool programs are the greatest for the most disadvantaged children. More advantaged children generally have encouraging early family lives. The “intervention” that a loving, resourceful family gives to its children has huge benefits that, unfortunately, have never been measured well. Public preschool programs can potentially compensate for the home environments of disadvantaged children. No public preschool program can provide the environments and the parental love and care of a functioning family and the lifetime benefits that ensue.

S: Do you have any thoughts overall on how this current crisis could impact social mobility and inequality?

H: Inequality in health and earnings will be exacerbated by it. Poverty and disadvantage foster disease. Inequality in access to health care fosters inequality in health and poor health inhibits the ability to contribute to society. With so many people now out of work — and out of health benefits — short-run inequality generated by poor health will increase in addition to the inequality created by the loss of jobs. We know this is true because those in poor health before COVID-19 struck are the primary victims of the new pandemic.

S: In your work a key component to childhood development and human capital is parental engagement. Because of the school closures and stay at home mandates in many states, children and their parents are staying at home which should increase the level of parental engagement. Do you think that this will be helpful for childhood development as it pertains to that specific issue or because of the heterogeneity of the quality of parental engagement and capacity of some parents to develop quality engagement, the end result could be more inequality as some kids will have a higher quality of parental engagement than others?

H: To those who have more will be given. For stressed families where the single parent is still working, the early childhood environment will likely worsen.

To Fix Education, Fix The Economy First

John Burn-Murdoch Financial Times

Date Posted:: August 7, 2026
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Is Important:: Important

Using OECD skills data and the Luxembourg Income Study, Burn-Murdoch finds US workers at the lowest levels of literacy and numeracy earn ~ on par with British workers scoring a 2, ~ a mean score.

30% of US adults have literacy skills typical of a 10-year-old. The same proportion of US workers who score stunningly low on literacy earn an average of almost $30 per hour, and two-thirds of them are in work. Their British counterparts make the equivalent of $20 and fewer than half are employed. This all looks more like the fruits of years of stronger growth than vocational education policy. We should view education as creating potential that a strong economy unleashes (and a weak one disappoints).

Meritocracy and the Networks It Forged: China’s Imperial Examination

Ying Bai and Ruixue Jia National Bureau of Economic Research

Date Posted:: August 3, 2026
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From 1644–1905, Qing China staffed its bureaucracy through exams and patronage. Only 12.6% of exam graduates reached top office, but patronage favored stronger performers, illustrating how merit and connections can be complements rather than substitutes.

Figure 5 studies the interplay between merit and networks by estimating the effects of exam performance and ties to powerful examiners separately for the high- and low-performing categories. The left panel shows the effects of exam performance for the two categories, while the right panel presents those of examiner power. Two patterns stand out. First, exam performance matters more for the high category, consistent with the institutional design that steered this elite group toward more prestigious careers. Second, ties to powerful examiners are also more valuable for the high category, pointing to a complementarity between merit and networks. To understand the implications of our finding on complementarity, it is useful to contrast it with the counterfactual of substitution. When merit and networks are complements (rather than substitutes), those who attained top office tend to exhibit both stronger exam performance and stronger connections. By contrast, under substitution, strong networks would compensate for weaker exam performance, and vice versa. Complementarity implies [a higher degree of meritocracy than substitution, as] successful candidates appear to have had better performance. Second, complementarity makes it harder to identify the influence of networks: their effects can operate under the guise of merit rather than as a visible substitute for it.

The Returns to Education: A Meta-Study

Gregory Clark and Christian Alexander Abildgaard Nielsen Kyklos

Date Posted:: February 11, 2026
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Is Important:: Important

Clark and Nielsen replicate the ~8% estimates of the return to education obtained by standard methods, but find evidence of selection biases in favor of high estimated returns. After correcting for these biases, they calculate returns on the order of 3%.

In this meta-study of 79 estimates of the causal effects of education on earnings (derived from increases of the mandated school-leaving age or legislation banning child labor under certain ages), we report a similar effect to [the classic] earlier study (Ashenfelter, et al): an 8.2% gain in earnings for each year of education. We also find clear evidence of significant publication biases. Studies passing the filter of publication were more likely to have coefficients statistically significantly greater than 0, and we observe strong evidence that studies with returns estimated at less than 0 were more difficult to publish. There is strong suggestive evidence of the first publication bias in the data. Figure 6 shows that the average estimated return rises substantially where the standard error is larger. This suggests a greater likelihood of an estimate being published when it was statistically significantly different from 0. If all estimates were published independent of the estimated return, we would not expect there to be such a gradient. Correcting the first publication bias by looking at the average return on the studies with the lowest standard errors would suggest an average causal return to education of no more than 3%, compared to the reported 8.2%. Independent of this, correcting for the omission of returns less than 0 implies an overall causal return to education only in the 0%–3% range.

Marginal Admission to Elite High Schools: Long-run Effects on Labor Market Outcomes

Francisco Cabrera-Hernández, Andrew Dustan, Daniel Osuna Gomez and María Padilla-Romo National Bureau of Economic Research

Date Posted:: January 22, 2026
Is Database:: Database

In data from the Mexico City metro area over 2003–2009, students who just missed the exam score cutoff for admission to an elite high school have 5.3% higher wages after five years (2.5% after 10 years) than marginally admitted students.

[We] trace out the [harmful] causal impact of [marginal] assignment to an elite school [as opposed to just missing the admissions cutoff] on formal private labor market outcomes over time. Five years after the assignment process (at ages 19-20, beyond high school age), elite assignment [based on a test score marginally above the cutoff] causes a 3.2pp decline in the probability of ever having held a formal job. This is a 16% decline relative to the base rate of 20% for students missing the elite cutoff by one point. Over time, this elite disadvantage declines: after 10 years (at ages 24-25, after the typical age of college graduation), the effect is -2.1pp, while after 15 years (at ages 29-30) the estimated -0.2pp impact is statistically insignificant. While the negative effect on formal employment eventually fades, it leaves elite students with a deficit in formal labor market experience. After 5 years, elite assignment reduces the cumulative number of months with a formal job by 14%. Conditional on formal employment, marginal elite assignment causes a reduction in wages that fades out over time. Five years after assignment, elite assignment reduces wages by 5.3%. This reduction declines to 2.6% after 10 years, and [essentially vanishes] after 15 years.

Plunging US Birth Rate Leaves Too Many Colleges With Too Few Kids

Elizabeth Rembert, Amanda Albright and Marie Patino Bloomberg

Date Posted:: January 16, 2026
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As America’s demographics roll over, smaller public and private liberal arts colleges have “already hit the precipice.” Btw 2003 and 2024, more than 100 public campuses closed, and ~ 2/3 of private for-profit colleges have shut down since the 2010s.

The country’s tumbling birth rate is pushing schools toward a “demographic cliff,” where a steadily dropping population of people in their late teens and early 20s will leave desks and classrooms empty. Many smaller, lesser-known schools have already hit the precipice. They’re firing professors, paring back liberal arts courses in favor of STEM — or closing altogether. Others will likely reach the cliff in the next few years. Although it has plunged since the 1950s, the US birth rate ticked upward slightly before the 2008 financial crisis, and that brief demographic boost has kept enrollment at larger schools afloat. But the nationwide pool of college-aged Americans is expected to shrink after 2025. The financial pressure will be relentless. “If colleges were facing a stark decline in one or two cohorts, higher ed could likely say, ‘Well, we could admit a few additional students and tighten our belts to muddle through,’” said Nathan Grawe, an economics professor at Carleton College in Minnesota, who has written books about education and demographics. “But it’s one year after another of contraction, of ratcheting up the pressure.”

How Mississippi Transformed Its Schools From Worst to Best

Sarah Mervosh New York Times

Date Posted:: January 13, 2026
Is Database:: Database

Controlling for poverty and demographics, Mississippi has the best outcomes for fourth-grade reading and math, and is near the top in eighth-grade scores. In absolute terms, “eighth graders still rank 41st on national tests for reading, and 35th for math.”

Adjusted for poverty and other student demographics, Mississippi is No. 1 for fourth grade reading and math, and at or near the top in eighth grade, according to the Urban Institute. Mississippi’s gains have been confined mostly to the early years, where the state has focused its efforts. The system revolves around standardized testing, and the gains have not always persisted. By raw scores, Mississippi eighth graders still rank 41st on national tests for reading, and 35th for math. The state pushed through a vast list of other changes from the top down, including changing the way reading is taught, in an approach known as the science of reading, but also embracing contentious school accountability policies other states have backed away from. Unlike No Child Left Behind, the Bush-era federal law that set a goal of having every child in America be proficient in reading and math, Mississippi also measures how much students progress toward proficiency. Schools get credit if students show improvement — and double credit for the improvement of students in the bottom 25%.

According to Dr. James Heckman, Family structure, not schools, drives social mobility. COVID impact: Pre-existing health gaps widen earnings inequality. Parent engagement quality during lockdowns emerges as key development factor.

Using OECD skills data and the Luxembourg Income Study, Burn-Murdoch finds US workers at the lowest levels of literacy and numeracy earn ~ on par with British workers scoring a 2, ~ a mean score.

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From 1644–1905, Qing China staffed its bureaucracy through exams and patronage. Only 12.6% of exam graduates reached top office, but patronage favored stronger performers, illustrating how merit and connections can be complements rather than substitutes.

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Clark and Nielsen replicate the ~8% estimates of the return to education obtained by standard methods, but find evidence of selection biases in favor of high estimated returns. After correcting for these biases, they calculate returns on the order of 3%.

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In data from the Mexico City metro area over 2003–2009, students who just missed the exam score cutoff for admission to an elite high school have 5.3% higher wages after five years (2.5% after 10 years) than marginally admitted students.

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As America’s demographics roll over, smaller public and private liberal arts colleges have “already hit the precipice.” Btw 2003 and 2024, more than 100 public campuses closed, and ~ 2/3 of private for-profit colleges have shut down since the 2010s.

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Controlling for poverty and demographics, Mississippi has the best outcomes for fourth-grade reading and math, and is near the top in eighth-grade scores. In absolute terms, “eighth graders still rank 41st on national tests for reading, and 35th for math.”

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