September 19, 2006

WORKING AMERICA, PART II: SOCIAL MOBILITY



Caption: As is the case with nostalgia, social mobility ain't what it used to be.

This is the second post on the key findings in the recently released State of Working America 2006/2007 by the Economic Policy Institute.

"Social mobility" refers to the ability or tendency of people to move up and/or down in income and social class.

In popular culture, the US economy is often portrayed in terms of the rags to riches stories associated with Horatio Alger. The reality is a little different. According to the report,

...we find significant income correlations between parents and their children, implying that income mobility is at least partially restricted by a parent's position in the income scale.


One recent study cited found the correlation between the incomes of a parent and child to be 0.6 (a correlation of 1.0 would mean that a parent's income level for all practical purposes determines the income of the child).

To be more specific,

we find that sons of low-earning fathers have slightly less than a 60% chance of reaching above the 20th percentile by adulthood, about a 20% chance of surpassing the median, and a very slight chance--4.5% of ending up above the 80th percentile.


There are many contributing factors to this, including quality of education and extent of educational attainment, family history, the stresses associated with poverty, health issues, etc.

One particularly surprising finding was a comparison of the rates of upward social mobility. The correlation between the incomes of parents and children was significantly lower--which means that social mobility between generations was actually higher--in Germany (0.43%), Sweden (0.28%), Canada (0.23%), and Finland (0.22%).

To add some reality to our cherished bootstrap myth, we need policies which help people access education, earn their way out of poverty, and build assets.

GOAT ROPE ADVISORY LEVEL: ELEVATED

1 comment:

mwildfire said...

First of all, I'd like to know why anyone would be expecting sons of low-income fathers to achieve much of anything BY ADULTHOOD...next I'd like to know why anyone would find it surprising that the countires with the strongest social infrastructure in the world have the most social mobility