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Tuesday, February 14, 2012

Is Intergenerational Economic Mobility Lower Now?

This discussion of recent trends in economic mobility is from Bhashkar Mazumder, a senior economist at the Federal reserve Bank of Chicago. The results, which are based, in part, on his research in this area, suggest "cause for concern":

Is intergenerational economic mobility lower now
than in the past?, Chicago Fed Letter
: In the wake of the Great Recession and the growth in income inequality over recent decades in the United States, the degree of economic mobility over generations has become an increasingly salient issue. A recent New York Times article highlighted the growing evidence showing that intergenerational economic mobility appears to be lower in the United States than in other advanced countries.1 President Obama and Republican presidential candidates have also referenced intergenerational mobility as being an issue of concern.2 One dimension of this issue that is not well understood, however, is whether intergenerational mobility has been changing over time and whether the prospects for mobility have been hampered for children growing up in families that have been hard hit by the recent economic downturn.
This Chicago Fed Letter discusses some of the research on trends in intergenerational mobility. I begin by describing how intergenerational economic mobility is commonly measured and show that, conceptually, it is a “backwards-looking” measure that describes the mobility experience of individuals born decades earlier. I then discuss two distinct approaches I have used in previous studies to study long-term trends in intergenerational mobility. After staying relatively stable for several decades, intergenerational mobility appears to have declined sharply at some point between 1980 and 1990, a period in which both income inequality and the economic returns to education rose sharply. This finding is also consistent with theoretical models of intergenerational mobility that emphasize the role of human capital formation. There is fairly consistent evidence that intergenerational mobility has stayed roughly constant since 1990 but remains below the rates of mobility experienced from 1950 to 1980.
Although we cannot say with any certainty how much mobility today’s children will experience over the coming decades, recent research suggests cause for concern. The gap in children’s academic performance between high- and low-income families has widened significantly over the last few decades. If this trend persists, it would point to reduced intergenerational economic mobility going forward. ...

More here.

    Posted by on Tuesday, February 14, 2012 at 12:36 AM in Economics, Income Distribution | Permalink  Comments (15)


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