The team of researchers initially analyzed an enormous database of earnings records to study tax policy, hypothesizing that different local and state tax breaks might affect intergenerational mobility.
What they found surprised them, said Raj Chetty, one of the authors and the most recent winner of the John Bates Clark Medal, which the American Economic Association awards to the country’s best academic economist under the age of 40. The researchers concluded that larger tax credits for the poor and higher taxes on the affluent seemed to improve income mobility only slightly. The economists also found only modest or no correlation between mobility and the number of local colleges and their tuition rates or between mobility and the amount of extreme wealth in a region.
But the researchers identified four broad factors that appeared to affect income mobility, including the size and dispersion of the local middle class. All else being equal, upward mobility tended to be higher in metropolitan areas where poor families were more dispersed among mixed-income neighborhoods.
Income mobility was also higher in areas with more two-parent households, better elementary schools and high schools, and more civic engagement, including membership in religious and community groups.
Regional variation in the U.S. turns out to be enormous:
In previous studies of mobility, economists have found that a smaller percentage of people escape childhood poverty in the United States than in several other rich countries, including Canada, Australia, France, Germany and Japan. The latest study is consistent with those findings.
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Yet the parts of this country with the highest mobility rates — like Pittsburgh, Seattle and Salt Lake City — have rates roughly as high as those in Denmark and Norway, two countries at the top of the international mobility rankings. In areas like Atlanta and Memphis, by comparison, upward mobility appears to be substantially lower than in any other rich country . . .
There was already ample reason to be skeptical of direct comparison between America and Europe; or rather between America and European countries. One finds it hard to imagine that the demographic, economic, geographic, and social state of tiny Denmark, with less people than metro Atlanta, is in any meaningful way apposite to the immensity of that same profile of the whole of America. Meanwhile, internal American comparison seems more promising. A remarkable opportunity presents itself for the enterprising scholar to compare Detroit and Pittsburgh, for instance.
There is also the flipside of high income mobility: folks fall down the scale. As a purely relative measure, mobility could very well be an indicator of the evanescence of prosperity. The study attempts to isolate for upward mobility only; but it is vital to keep this dark side of mobility in mind. Only a fool forgets that wealth and affluence once gained, is never perfectly secure. The dissipation of prosperity across generations is, perhaps, no less interesting (if rather more morbid) than its augmentation. Readers who are also parents: reflect, personally, on whether you are prepared to sacrifice some dynamism in your children’s economic future, for a larger share of stability and security.
For indeed anxiety about the preservation of wealth and security has become the unstated spring of politics in the West. Detroit is only the most dire example of the crisis.
Advanced industrial economies preserve wealth in large part by means of a highly complex and differentiated financial system, which when operating properly facilitates the investment of the accumulated capital of the older generations, into the productive activities of the rising generations. When this generational economy breaks down, when productive activities dwindle or languish, and capital is drawn into the onanistic vortex of usury: that’s when the dark, morbid side of mobility casts a shadow over all things.
Now, there are undoubtedly many intricate paths of causality here; but I am going to insist that the most basic cause of a dwindling of the productive activities of the rising generations, is a sheer dwindling of the rising generations. Even the most productive of activities will not support a prosperous intergenerational economy if there aren’t enough people in the rising generations to undertake those activities sufficiently. Societies of men must reproduce that they might produce. But the real challenge lies in this: reproduction on the level of individual families is destructive of productive capacity. According to Jon Last’s excellent What to Expect a professional wife will give up something close to a million dollars in lost earnings, should she decide to stay home and care for a child from birth until 18 years of age. That’s a staggering loss of income for a family, one that is only partially mitigated by any part-time work which imposes new fixed costs for day-care.
A rational politics must reckon with these matters — no less than it must reckon with city geography, education and public transportation. The sexual constitution is inevitably bound up with our political economy by the elusive but powerful undercurrents of mores, scruples, habits, traditions, and customs.
But the old verities endure, as even this mobility studies adumbrates. The best path to gaining and retaining affluence is: being born into an intact, two-parent household, attending a good school, completing school and marrying before conceiving children, going to church, and engaging in the civic life of your community.