WASHINGTON – Young Americans from low-income families are as likely to move into the ranks of the affluent today as those born in the 1970s, according to a report by several top academic experts on inequality.
The study, published this week by the National Bureau of Economic Research, runs counter to the widespread belief that a widening gap between rich and poor has made it harder to climb the economic ladder.
Democratic and Republican lawmakers alike have expressed alarm over what had been seen as diminishing opportunities for economic advancement through hard work and ingenuity.
Instead, the study found that 9 per cent of children born in 1986 to the poorest 20 per cent of households were likely to climb into the top 20 per cent — little-changed from 8.4 per cent for such children born in 1971.
“Absolutely, we were surprised” by the results, says Harvard University economist Nathaniel Hendren. He is one of the report’s authors along with Harvard’s Raj Chetty, Emmanuel Saez and Patrick Kline of the University of California, Berkeley, and Nicholas Turner of the Treasury Department.
Worries have been growing across the political spectrum about an expanding divide between America’s rich and the rest: The top 1 per cent of Americans accounted for 22.5 per cent of income earned in the United States in 2012. That is one of the highest figures since the Roaring ’20s and up from a low 8.9 per cent in 1976, according to a database maintained by Saez.
But the fact the top 1 per cent are pulling away has had little effect on the ability of those in the bottom fifth to rise to the top fifth, the study found.
The findings are open to different interpretations: They could suggest that government programs to help the poor have made little headway in increasing economic opportunity. Or they could suggest that economic advancement would have become harder without such programs.
“My concern is that there may be less mobility in the future,” former White House economic adviser Alan Krueger said by email. The cost of a college education, for instance, is increasingly difficult for low- and middle-income families to afford.
Hendren emphasizes that it’s still harder to move from poverty to affluence in the United States than in most other wealthy countries. In a 2012 study of 22 countries, economist Miles Corak of the University of Ottawa found that the United States ranked 15th for social mobility. Among wealthy countries. Only Italy and the Britain ranked lower.
“In some sense, how could it have gotten worse?” Hendren said. “It’s not like we’re losing the American Dream. We never really had it.”