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Monday, March 04, 2013

U.S. Economic Mobility: The Dream and the Data

Leila Bengali and Mary Daly on economic mobility:

U.S. Economic Mobility: The Dream and the Data, by Leila Bengali and Mary Daly, Economic Letter, FRBSF: Economic mobility, or the ability of individuals to move up or down the income distribution, is a fundamental value in the United States, one that defines the American Dream. According to a recent study by the Pew Charitable Trusts, over 40% of Americans consider hard work, ambition, and drive to be among the most important factors for economic advancement (Pew 2011). In contrast, just over 10% believe that coming from a wealthy family is one of the most important determinants of success. International surveys suggest that Americans stand out in their belief that individual effort is the key determinant of success (International Social Survey Programme 2009).
This Economic Letter examines whether the reality of mobility in the United States matches the dream. U.S. mobility data suggest that the answer is mixed, depending importantly on exactly how mobility is measured. The United States scores well on the percentage of individuals who are able to surpass the absolute level of income of their parents. But when the metric is relative economic mobility, the picture is less clear. The data show that when the population is divided in fifths, the middle three groups of the income distribution are fairly mobile. For this middle group, where one is born in the distribution does not determine where one will end up. But for those born in the bottom or the top fifth, mobility is much more constricted, suggesting that birth circumstances play more of a role in lifetime outcomes. ...[continue]...

    Posted by on Monday, March 4, 2013 at 10:33 AM in Economics, Income Distribution | Permalink  Comments (7)


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