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Monday, December 5, 2016

August 8 (Bloomberg) — Americans pride themselves on their intergenerational mobility. Our nation’s exceptionalism is organized around the American dream: No matter where you come from and no matter who your parents are, you can rise to the top of the economic ladder, so long as you are willing to commit yourself and work hard.

In recent years, however, a great deal of comparative research has been done on intergenerational mobility, and it raises legitimate questions about the claim that the U.S. stands out as a land of opportunity. In 2006, a widely reported study found that in terms of intergenerational mobility, the U.S. lagged behind Nordic nations (including Denmark, Finland, Sweden and Norway) as well as the U.K. For example, Danish men born to households in that nation’s bottom quintile are far more likely than their U.S. counterparts to make it to the higher quintiles.

A comprehensive study published in July found that the U.S. shows less intergenerational mobility than do a number of other countries, including Germany, New ZealandCanadaAustraliaFrance and Japan. The U.S. is marked by a degree of “stickiness” in the top and bottom 10 percent. If an American is born to poor parents, he has a decent chance of staying poor, and if his parents are wealthy, it is a pretty good bet that he will end up in the economic elite.

However illuminating, the data raise many questions. The U.S. is a big country, and the aggregate numbers don’t tell us about variations across states.

Southeast Lags

Does the reality of the American dream depend on whether you are born in Mississippi, ColoradoKentucky or New Hampshire? The answer would help us to establish what, exactly, is the source of the problem. It could also help us to identify some responses.

Harvard University economist Raj Chetty and his co-authors have started to provide such an answer. The big news is that intergenerational mobility is indeed variable across regions, states and cities. If you are born in Pittsburgh, Boston, San Francisco, Minneapolis or New York, you have a fair chance of getting to the top fifth of the income distribution, even if you start out in the bottom fifth. But in other cities — such as Atlanta; Charlotte; Nashville, Tennessee; and Raleigh, North Carolina — children who are born into the bottom fifth are significantly more likely to get stuck.

The state-by-state data suggest an even more vivid picture. In almost all of the West, there is a high degree of intergenerational mobility. The Northeast and the Southwest also look pretty good. In the Midwest, the picture is more mixed, with generally high levels of mobility in Minnesota, Nebraska and North Dakota but disturbingly low levels in some cities, including Detroit, Indianapolis and Columbus, Ohio.

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