Wednesday, February 4, 2015

The Inequality of Opportunity in America - The Real State of the American Dream

While America's political masters pontificate about the current state of the union, there is one issue that is of key importance to many Americans; upward mobility in our society.  The United States has long prided itself on being the "Land of Opportunity" where, with hard work, anyone can get ahead.  Is this philosophy still prevalent across the entire U.S. today or are there some areas where upward social and economic mobility is far less likely?  A paper by the Equality of Opportunity Project at Harvard looks at upward income mobility varies across the United States and which regions offer better opportunities to "move up".

The authors of the study used a sample of all American children that were born between 1980 and 1982 in 741 commuting zones (CZs) which are defined as geographical aggregations of counties that are similar to metropolitan areas but include rural areas.   They then measured the income of those same Americans in 2011 - 2012 when the group is approximately 30 years old.  Using the income data, the authors calculate two measures of intergenerational social mobility:

1.) Relative mobility which measures the difference in the expected outcomes between children from high- and low-income families.

2.) Absolute upward mobility which measures the expected economic outcomes of children born into a family with an income of approximately $30,000 annually (the 25th percentile of the income distribution).

Much of the variation in children's outcomes emerges before they enter the labor market which suggests that the differences in mobility are related to factors that impact children while they are growing up.

Here is a map which shows the average percentile rank of children who group up in below-median income families with lighter colors showing areas where children from low income families are more likely to move up in income distribution and darker colors showing areas where children from low income families are less likely to move up in income distribution:

You will notice that in the southeast regions of the United States, the odds that a child will experience absolute upward mobility are far lower than most other pars of the nation, excluding a few areas in the southwest and mid-west.  As well, absolute upward mobility is less likely throughout the former industrial heartland of northern Kentucky, Ohio, Michigan and Indiana.

If you wish to access an interactive version of this map, you can find the link here.

Among the biggest fifty cities in the United States, here are the ten cities where it is most likely that children starting their lives in the bottom fifth will rise to the top fifth and the odds that they will do so:

Here are the ten cities where it is least likely that children starting their lives in the bottom fifth will rise to the top fifth and the odds that they will do so:

Some of these cities have lower rates of mobility than are found in any other developed nation in the world.

The authors analyzed the factors that drive the variation in social mobility and found the following:

1.) intergenerational mobility is strongly related to the level of college attendance and teenage birth rates.

2.) upward mobility is significantly lower in areas with larger African-American populations, however, the authors note that white individuals in areas with large African-American populations also have lower rates of upward mobility.

3.) upward mobility is higher in cities with less urban sprawl as measured by commute times to work, suggesting that segregation is a significant factor in mobility.

4.) CZs with larger Gini coefficients (i.e. higher income disparity) have less upward mobility.  This suggests that the erosion of the middle class hampers intergenerational mobility more than the factors that lead to income growth among high income earners.

5) areas with higher school test scores, smaller class sizes and lower school dropout rates have higher rates of upward mobility.  They also observed that areas with higher local property and school tax rates have higher rates of upward mobility.

6.) the strongest predictor of upward mobility is family structure.  Where the percentage of single parent families is higher, upward mobility rates are lower.  It is also interesting to note that children of married parents have higher upward mobility if they live in communities with fewer single parents.

7.) the strength of social networks and community involvement is closely correlated to upward mobility.  CZs with higher fractions of religious individuals and participants in local civic organizations tend to have higher rates of upward mobility.

While the American Dream is still alive, it is not particularly healthy in some parts of the United States.  What is quite clear from this study is that those who live in certain regions of the United States simply don't those who live there sufficient chances to "get ahead" economically and that the chances of escaping poverty in some regions is extremely low, making it more and more likely that economic inequality will continue to rise over the coming decades.

No comments:

Post a Comment