Social mobility wanes in the U.S. while income inequality rises

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Upward income mobility has decreased to the point where the United States is now among the least mobile of advanced economies, says the Congressional Research Service, based on published research reports. Income inequality has simultaneously substantially increased, the CRS notes in a report (.pdf) posted online by Secrecy News.

"Where one starts in the U.S. income distribution greatly influences where one ends up," the report states – a state of affairs at odds with the long-held perception of America as a place where the main barriers to success are lack of hard work and perseverance.

Empirical analyses cited by the report estimate a positive relationship of about .5 between parent and adult income, meaning that children of above-average income parents are on average likely to also earn higher incomes. In other words, about half of the economic advantage the children of high-income families enjoy comes from having been born into that affluent family.

Two economic research papers cited by the report trace the decrease in income mobility to sometime within the 1980s or early 1990s.

Another doesn't find major recent changes in intergenerational income mobility, but the CRS notes that no change in mobility means no offset to rises in income inequality.

Similarly, the chances of adults to move from their initial economic positions have decreased or remained the same in recent decades.

When compared to other advanced economies, one study finds that intergenerational income change in the United States is less mobile than Spain. Another study cites a host of European nations where the income of parents is less likely to influence children's income, including Germany and Scandinavian nations.

Authors of one study suggest that a perception of living in a mobile society persists in the United States because rates of mobility in the middle three quintiles of the population – that is, neither topmost nor bottommost earners – are similar here to other advanced economics.

Since 1980, the share of total U.S. income held by the top fifth of income earners has grown from 44.1 percent of the total to 51.1 percent in 2011, the CRS report says (citing Census Bureau data), while the share of the bottom fifth of income earners has fell from 4.2 percent to 3.2 percent.

United States is among the countries that experienced the largest increases in inequality over a quarter century ending in the mid-2000s and has greater disparities in income distribution than the United Kingdom and Australia, the report says, citing another study.

"Going from rags to riches is relatively rare," the report concludes.

For more: 
- download the report from the Secrecy News website, R42400 (.pdf)

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