Economic Mobility in American A State of the Art Primer Part 2: The United States in Comparative Perspective
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Americans have a higher likelihood of surpassing their parents’ income, yet they face challenges in moving beyond their parents’ income distribution rank.
new Winship note looks at cross country mobility finds that there no basis for strong assertions that relative earnings mobility is higher outside the US US mobility is in line with our international comps. Americans have a greater chance of exceeding their parents’ income than the usual suspects (Chetty et al.) suggest, but they have a lower chance of transcending their parents’ rank in the income distribution
"....Focusing on earnings, the US is not an outlier in terms of relative mobility, even if absolute mobility patterns tend to reduce childhood inequalities less here than in other countries (as indicated by IGEs).* This is an important distinction, because commentators and researchers often claim to be concerned about relative mobility—transcending initial position or rank— even as they point to IGEs, which summarize absolute mobility patterns. IGEs look higher, and so “mobility” lower, when grown children have more contemporary inequality versus the cross-sectional inequality their parents experienced. But the fact that the income gap between the upper middle class and the poor has grown says nothing about whether it has become harder for a poor child to become an upper-middle-class adult....relative mobility measures accord better with most conceptions of opportunity than do absolute mobility measures (including the IGE). (Relative mobility measures also have practical advantages over absolute mobility measures, as discussed in that section.).... The evidence indicates the US holds its own when it comes to relative earnings mobility, whether looking at sons or daughters. It also tells us that when parental family income is the basis for assessing mobility, relative mobility looks lower in the US than elsewhere. And, reflecting the higher levels and growth of inequality in the US, absolute inequalities between children tend to diminish less in the US by adulthood than they do in other countries, whether looking at earnings or family income. As the relative mobility literature continues to grow more sophisticated, it would not be surprising to see more studies using parental income that find smaller cross-national differences, following the trajectory of the relative earnings mobility research. And even research estimating IGEs is likely to continue finding higher elasticities than the less-methodologically sound studies of the past, as has happened in the US as methods have improved....."
Scott Winship, "Economic Mobility in American A State of the Art Primer Part 2: The United States in Comparative Perspective," Archbridge Institute, December 2018, https://www.archbridgeinstitute.org/wp-content/uploads/2018/12/Archbridge-Economic-Mobility-primer-part2-US-in-perspective.pdf
*international elasticity