The Archbridge Institute has kicked off a three-part series that explores intergenerational economic mobility—i.e., how much people’s income differs from that of their parents. In the first installment, author Scott Winship attempts to make sense of what he calls an “explosion of mobility research.”
The report uses data from the Panel Study of Income Dynamics (PSID), which has tracked the income of a nationally representative sample of adults and their children for nearly fifty years. Given income’s sensitivity to age and chance, assessing economic mobility is challenging. To address this, data are collected from over six hundred parents and their children starting at age forty (or as close as possible to it), the age that has been found to be most representative of lifetime income. Then, bi-yearly income averages for parents and their children are calculated between the ages of twenty-five and fifty-five.
Distributional analyses show that absolute intergenerational mobility is around 75 percent, meaning that about three out of four children will grow up to make more money (adjusted for cost of living) than their same-sex parent. Economic growth is encouraging but does not always translate to opportunity and access because it does not factor in “how well or poorly peers have done.” For instance, if everybody’s incomes increase by the same amount, there will be no change in people’s ranks; the bottom may be higher, but it is still the bottom. Assessing how a person’s economic ranking compares to that of his or her parents requires a different measure—relative intergenerational mobility.
Relative to their peers, the poorest and richest children will likely grow into the poorest and richest adults. Children of parents in the middle experience markedly higher levels of mobility in both directions at nearly balanced rates, meaning it’s equally likely for them to move up a rank as it is for them to move down. In sum, per the absolute measures, most people are making more money than their parents, but few are upwardly mobile. Overall, Winship’s findings suggest that obstacles to overcoming disadvantaged family origins remain large, and that “past research has overstated the extent to which patterns of relative mobility reduce childhood relative income gaps.”
The author highlights several important limitations to the study. First, he stresses the mobility estimates presented are descriptive, and not causal; it is very likely that many factors other than parental income affect children’s life trajectories. Second, PSID’s sample is fairly small and, due to data availability, income amounts used in the study are multiyear averages. Winship also stresses that, if given access to data that spans more years, mobility levels would be even lower because outliers would be less impactful.
So, what is education’s role in this discussion? The report focuses on economic over educational mobility measures, the author argues, because educational attainment is less reliable than income for several reasons. For one, the range of educational attainment is limited (and crowds at twelve and sixteen years of schooling). Additionally, the amount of educational attainment does not always speak to the quality of the education received. Therefore, it is harder to establish relationships between education and other life outcomes. Though compelling, other research does make this link.
Low-income students make up nearly half of the U.S. public school population. In line with Winship’s findings, it’s likely that many of those students will eventually raise their own children in the economic conditions they were raised within, and education is a key variable in this equation. This is significant for states that are completing their ESSA accountability plans. Intentionally targeting disadvantaged students, including those that are higher achieving, may help close the gap.
SOURCE: Scott Winship, “Economic Mobility in America: A State-of-the-Art Primer,” Archbridge Institute (March 2017).
