Increasing mobility

Bradford Wilcox at The Atlantic writes:

But for all the new attention devoted to the 1 percent, a new dataset from the Equality of Opportunity Project at Harvard and Berkeley suggests that, if we care about upward mobility overall, we’re vastly exaggerating the dangers of the rich-poor gap. Inequality itself is not a particularly potent predictor of economic mobility, as sociologist Scott Winship noted in a recent article with his colleague Donald Schneider based on their analysis of this data.

You will always have inequality. A 45 year old with 30 years experience will almost always have a much higher income than an unskilled 18 year old.

What is more important is indeed mobility, can you be born poor, but rise out of it.

So what factors, at the community level, do predict if poor children will move up the economic ladder as adults? …

Harvard economist Raj Chetty, a principal investigator at the Equality of Opportunity Project, has pointed to economic and racial segregation, community density, the size of a community’s middle class, the quality of schools, community religiosity, and family structure, which he calls the “single strongest correlate of upward mobility.” Chetty finds that communities like Salt Like City, with high levels of two-parent families and religiosity, are much more likely to see poor children get ahead than communities like Atlanta, with high levels of racial and economic segregation.

Very interesting. And the three big ones are:

1. Per-capita income growth

2. Prevalence of single mothers (where correlation is strong, but negative)

3. Per-capita local government spending

In other words, communities with high levels of per-capita income growth, high percentages of two-parent families, and high local government spending—which may be a proxy for good schools—are the most likely to help poor children relive the Horatio Alger story. 

So grow incomes for all, invest in schools and have more two parent families.

But many measures directly related to income inequality—such as the size of the middle class in a community, or the gap between the richest and poorest middle-class households in communities—seem far less important than local growth, two-parent households, and local spending.

Good data, but a warning.

Still, we don’t know which way causation runs. High economic mobility might lead to more marriages, creating dual-earner households that would, in turn, facilitate more mobility. Periods of economic growth might make local governments richer, which would lead to more local spending on schools, which better prepare low-income students for college. These are knotty and interlocking variables. 

Would be great to get data for New Zealand.