Some facts about U.S. economic mobility

1. Some facts about U.S. economic mobility Katharine Bradbury Federal Reserve Bank of Boston October 3, 2012 Northeastern University Open Classroom

2. Overview • Why worry about mobility? • Intra-generational mobility • How much do families’ incomes change from year to year? Over 10 years, are they likely to end up in the same income position as they started? • Has the degree of movement changed over time as U.S. inequality has risen? • Inter-generational mobility • How much do children’s incomes as adults resemble their parents’ incomes when they were growing up? • Comparisons over time and across countries

3. Source: Data from Katharine Bradbury, “Trends in U.S. Family Income Mobility, 1969–2006,” Federal Reserve Bank of Boston Working Paper 11-10.

4. Source: Katharine Bradbury, “Long-Term Inequality and Mobility,” Federal Reserve Bank of Boston Policy Brief No. 12-1.

7. Selected slides from deck posted by Stanford Center for the Study of Poverty and Inequality

8.  Update through 2008, Pursuing the American Dream: Economic Mobility Across Generations. July 2012.

10. Intergenerational Income (Im)mobility Intergenerational income mobility can be measured by calculating the rate at which individuals move to income quintiles that are different that that of their families of origin. The proportion of sons who remained in the bottom quartile declined between 1961 and 1972 and stayed the same afterward. Family Background and Income in Adulthood (individuals age 30 to 59) Source: David Harding, Christopher Jencks, Leonard M. Lopoo, and Susan E. Mayer. 2008. “Family Background and Incomes in Adulthood.” pp. 505-515 in Social Stratification: Class, Race and Gender in Sociological Perspective, edited by David B. Grusky. Boulder, CO: Westview Press. Slide from http://www.stanford.edu/group/scspi/cgi-bin/facts.php

11. Intergenerational (Im)mobility: Elasticities between parental income and sons' earnings, 1950–2000 Notes: The IGEs shown are for 40- to 44-year-old sons.Data reflect annual family income for the parents and annual earnings for the sons. Data are from Daniel Aaronson and BhashkarMazumder, “Intergenerational Economic Mobility in the United States, 1940 to 2000,” Federal Reserve Bank of Chicago Working Paper 2005-12 (revised 2007), Table 1. • Source: State of Working America, 12th edition, Economic Policy Institute’s analysis of Aaronson and Mazumder (2007). • Slide from http://stateofworkingamerica.org/chart/swa-mobility-figure-3u-elasticities-family/

12. Trend in 90/10 Income Achievement Gap, by Birth Cohort (1943 to 2001 Cohorts) Reading Math Source: Sean F. Reardon, “The Widening Academic Achievement Gap Between the Rich and the Poor: New Evidence and Possible Explanations,” in Greg J. Duncan and Richard J. Murnane (Eds.), Whither Opportunity? Rising Inequality, Schools, and Children’s Life Chances, 2011,Figures 5.1 and 5.2.

13. Education’s role in intergenerational mobility Whither Opportunity? Rising Inequality, Schools, and Children’s Life Chances, edited by Greg J. Duncan and Richard J. Murnane. 2011. https://www.russellsage.org/publications/whither-opportunity-PB-Ebook • The developing child and adolescent • The family • Neighborhoods • Labor markets • Schools

14. Share of students completing college, by socioeconomic status and eighth-grade test scores Socioeconomic status is measured by a composite score that includes family income, parental education, and parental occupation. Data are from Mary Ann Fox, Brooke A. Connolly, and Thomas D. Snyder, Youth Indicators 2005: Trends in the Wellbeing of American Youth, Table 21, U.S. Department of Education. • Source: State of Working America, 12th edition, Economic Policy Institute‘s analysis of Fox, Connolly, and Snyder (2005). • Slide from http://stateofworkingamerica.org/chart/swa-mobility-figure-3o-share-students-completing/

15. Share of students completing college, by socioeconomic status and eighth-grade test scores Socioeconomic status is measured by a composite score that includes family income, parental education, and parental occupation. Data are from Mary Ann Fox, Brooke A. Connolly, and Thomas D. Snyder, Youth Indicators 2005: Trends in the Wellbeing of American Youth, Table 21, U.S. Department of Education. • Source: State of Working America, 12th edition, Economic Policy Institute‘s analysis of Fox, Connolly, and Snyder (2005). • Slide from http://stateofworkingamerica.org/chart/swa-mobility-figure-3o-share-students-completing/

16. U.S. economic mobility: key facts Rising mobility needed to offset rising U.S. inequality • Intra-generational mobility is not high and has not been increasing. • Inter-generational mobility is not high and has not been increasing. Hence rising cross-sectional income inequality has translated into • increased long-term income inequality among families • increased differences in economic outcomes between children of the rich and children of the poor.

18. Additional slides

19. “Great Gatsby” Curve: Inequality and intergenerational mobility across nations Source: Miles Corak, “Inequality from Generation to Generation: the United States in Comparison,” draft paper, University of Ottawa, 2011. Slide from http://milescorak.com/2012/01/12/here-is-the-source-for-the-great-gatsby-curve-in-the-alan-krueger-speech-at-the-center-for-american-progress/

20. Figure 4 Source: Author’s calculations based on PSID and CNEF.