While inequality rose, study finds economic mobility hasn't changed in 40 years

Across the last four decades, upward mobility hasn't declined in the United States, but it also hasn't improved, according to a new paper written by a group of economists. Jeffrey Brown discusses that stagnation and possible contributing factors with Raj Chetty of Harvard University, one of the authors of the study.


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JUDY WOODRUFF:  Our next segment examines new research that's drawing attention for its findings about economic opportunity in America. 

Jeffrey Brown picks it up from here. 

JEFFREY BROWN:  Is it still possible to climb to the top in America?  In a paper released this week, a group of economists found the prospects for upward mobility, the theme of the American dream, haven't changed in the last several decades. 

The ability to move up the income ladder hasn't worsened, but it also hasn't improved. 

Raj Chetty, one of the authors of the study, is professor of economics at Harvard University, and he joins me now. 

Well, thanks for joining us. 

It might be helpful first to define what you mean by upward mobility.

RAJ CHETTY, Harvard University:  Sure. 

What we mean by upward mobility in this study is a child's chances of moving up in the income distribution.  One way to measure that is the chance that a child, say, from the bottom fifth of the income distribution reaches the top fifth of the income distribution. 

You could also measure it in other ways.  What is the average outcome of children from low-income families or what are their odds of reaching the middle class?  No matter which way we define upward mobility, the main finding of our most recent study is that your odds of climbing up the income ladder haven't changed significantly over the past three decades or so. 

JEFFREY BROWN:  So were you surprised by that finding?

RAJ CHETTY:  Yes, we were quite surprised, because I think many Americans have the perception, and certainly the public conversation has been that prospects for upward mobility are declining in the U.S.

And, to the contrary, what we found is that your odds of climbing up the income ladder haven't actually changed significantly, even while the amount of inequality, as has been widely discussed, has increased substantially over this period. 

JEFFREY BROWN:  Well, so let's go to that. 

I mean, first of all, is it a glass half-full or half-empty situation?  How do you look at the problem that we have today? 

RAJ CHETTY:  Well, I think you shouldn't interpret the lack of a decline in upward mobility as good news, in the sense that intergenerational mobility in the U.S., social mobility, is lower than virtually any other developed country for which we currently have data. 

And so the way to think about this is that upward mobility is quite low, unfortunately, on average in the U.S., and it has remained -- it's been persistently low for the past few decades.  And so, in that sense, I think it's still an important and urgent policy priority to focus on identifying ways of improving upward mobility. 

JEFFREY BROWN:  Well, in thinking about that, about possible policy prescriptions, how much do we know about why this has happened, why it has stayed the same or stagnated? 

RAJ CHETTY:  Yes, that's a challenging question. 

One of the trends that we have seen, as I just mentioned, is that inequality has increased.  And conventional wisdom is that greater inequality might make upward mobility more difficult.  One way to picture that is think of the income distribution as a ladder, and the rungs of the ladder or the percentiles of the income distribution, while inequality has been increasing, that means the rungs of the ladder have grown further apart. 

And so you might have thought, intuitively, that's going to make it harder for kids to climb up that ladder if they are starting from a low position.  That turns out not to have happened.  And so perhaps one hypothesis that other things have changed at the same time.  Over the past several decades, we have had significant improvements in civil rights, expanded access to higher education, and a number of other anti-poverty efforts that might have offset that detrimental effects of other forces in the economy. 

JEFFREY BROWN:  But, as you said, inequality certainly has increased.  So, what -- make the connection here for us.  I saw a quote where you said, "Now it matters more who your parents are today than it did in the past."

So you're saying that the consequences of inequality have increased, somehow impacting mobility, upward mobility?

RAJ CHETTY:  That's exactly right, Jeff.

So, the way to think about that is because the rungs of the ladder are further apart, to go back to the analogy I was just using, who your parents are, if you happen to be by chance born to parents at the bottom of that ladder vs. the top of the ladder, that is more consequential today than it was in the past, precisely because the ladder is now expanded. 

So if you are born to parents who happen to be at the 20th percentile, instead of the 80th percentile, that is a much bigger gap today than it was 30 or 40 years ago.  And so the consequences of the fact that we have relatively low levels of mobility in the U.S. are much more serious today than they were in the past.  And so we should be more concerned about the fact that mobility is quite low today. 

JEFFREY BROWN:  I want to come back to one other thing you mentioned, which is the comparison to other countries. 

You said because the U.S. remains behind many other countries now when it comes to upward mobility.  Do we know why?  Do we know what other countries are doing that make it easier for mobility? 

RAJ CHETTY:  Well, it's difficult to draw lessons from cross-country comparisons, because there are lots of other differences across areas. 

But in another study we have done, which we actually discussed on the NewsHour a few months ago...

JEFFREY BROWN:  I remember, yes. 

RAJ CHETTY:  ... we look at the geography of mobility within the United States, and show that there is a lot of variation in upward mobility across areas within the U.S.

So, to give you one example, the odds of a child from the bottom 20 percent reaching the top 20 percent are four out of 100 in Atlanta, but 13 out of 100 in San Jose, nearly three times as large.  And so the question that we ask is, what is driving that difference in upward mobility within the U.S.?

And we identify a set of factors, a set of correlated factors, such as segregation, income inequality, the quality of schools in an area, family structure and measures of social cohesiveness, all of which are related to higher levels of upward mobility. 

Now, we don't know exactly what the causal determinants are, what the recipe is that makes San Jose have higher upward mobility than Atlanta.  But that's exactly what we would like to figure out and identify policies to improve upward mobility going forward. 

JEFFREY BROWN:  Well, and do you and your colleagues look at other kind of policy areas, I'm thinking about -- where -- that could make a difference, I mean, in upward mobility?  I am thinking about education, for example, whether it's public K through 12 or higher education. 

RAJ CHETTY:  Absolutely.

I think education could play a key role here.  And we have done other work showing that the quality of teaching, in particular in elementary schools, has very significant impacts on kids' outcomes in the long run.  And I think another important factor to keep in mind is a lot of these differences in upward mobility that we're seeing across areas emerge at relatively early ages. 

By the time kids are 18, you're seeing a lot of these differences in teenage pregnancy rates and college attendance rates.  And so that suggests to me that we need to be intervening relatively early on, consistent actually with the earlier segment, on food insecurity, where researchers have found in a variety of contexts that it's those early formative years, as well as around age 10, age 15, that is the point at which differences really can emerge and where intervention, I think, is important. 

JEFFREY BROWN:  All right, Raj Chetty -- Raj, OK, let me ask you one more question. 

You mentioned that, you know, upward mobility is cited regularly by politicians nowadays.  Are they -- have they just missed something? 

RAJ CHETTY:  Well, I think people's perceptions about trends in mobility may not quite have been accurate, but I think the increased focus on income mobility as a key policy priority is absolutely right on. 

And I think our study reinforces that message that there are significantly lower levels of upward mobility than you might like in many parts of the U.S.  Even though that hasn't changed significantly over time, we should be concerned that there is a persistent problem in many parts of America, like Atlanta, like Charlotte, like Indianapolis, and many other cities, where kids from disadvantaged backgrounds really don't have great odds of succeeding.

And I think it's critical to identify policies that can change that situation. 

JEFFREY BROWN:  And where is your study going from here?  Because we did have that conversation last year, when you were looking at geography.  And now you come up looking at upward mobility.  Where do you go from here? 

RAJ CHETTY:  Yes, that's right.

So all this work is part of what we're calling the Equality of Opportunity Project.  And the goal of this project is to use scientific methods and big data to try to identify what the determinants of upward mobility are and how we can improve kids' outcomes from disadvantaged backgrounds. 

One of the things we are going to study next is look at people who move across areas.  Take a person who moves from Atlanta to San Jose or Atlanta to Salt Lake City.  How do their kids' outcomes change, and what can we learn about what the exact causal factors are by looking at people who move across different areas?

JEFFREY BROWN:  All right, Raj Chetty, thanks so much. 

RAJ CHETTY:  Thank you.  My pleasure.