AMERICANS are deeply divided as to whether widening inequality is a problem, let alone what the government should do about it. Some are appalled that Bill Gates has so much money; others say good luck to him. But nearly everyone agrees that declining social mobility is a bad thing. Barack Obama’s state-of-the-union speech on January 28th dwelt on how America’s “ladders of opportunity” were failing (see article). Paul Ryan and Marco Rubio, two leading Republicans, recently gave speeches decrying social immobility and demanding more effort to ensure poor people who work hard can better their lot.
Just as the two sides have found something to agree on, however, a new study suggests the conventional wisdom may be wrong. Despite huge increases in inequality, America may be no less mobile a society than it was 40 years ago.
The study, by a clutch of economists at Harvard University and the University of California, Berkeley, is far bigger than any previous effort to measure social mobility. The economists crunch numbers from over 40m tax returns of people born between 1971 and 1993 (with all identifying information removed). They focus on mobility between generations and use several ways to measure it, including the correlation of parents’ and children’s income, and the odds that a child born into the bottom fifth of the income distribution will climb all the way up to the top fifth.