Has income mobility stalled?

Date posted: March 19, 2014

Host Mary Walden says that one of the positive points about our country is the ability of people to move up the income ladder. Someone born poor could become a millionaire in their lifetime. But some say this is no longer possible or at least the income ladder has become harder to climb.  She asks her husband, economist Mike Walden, “What does the evidence say?”

N.C. State University economist Mike Walden: “Mary, we’ve had a number of studies on this issue, obviously because it’s been a very important issue over the last couple of decades. Some indicate that income mobility has been reduced, some say it has not.

“We do have fresh new study — it’s from an economist at Harvard. I think the unique thing about this study is the number of households the economist was able to analyze.  Forty million — 40 million households he was able to study over several decades. And he came to two major conclusions from this massive, massive study.

“First of all, he concluded that income mobility in total has not declined over time. That is, the average person is just as able to climb the income ladder today, he argues based on his research, as that person was several decades ago. But the second big conclusion is it’s not the same across the country. The ability to climb the income ladder really depends where you live, and it depends on things like the quality of schools, your family structure, the types of businesses that are in that local area.

“So, this is a new piece of research. It’s obviously not going to be the final say on this very, very important issue, but I think it is significant because of the massive number of households used to come to the conclusions.”

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