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It may seem to be getting harder, but in reality it's not. Rank based measures of mobility are stable. Since income inequality is up, absolute mobility has also

It may seem to be getting harder, but in reality it's not. Rank based measures of mobility are stable. Since income inequality is up, absolute mobility has also increased. https://eml.berkeley.edu/~saez/chettyetalAERPP2014.pdf https://eml.berkeley.edu/~saez/chettyetalAERPP2014.pdf

rfrank 10y ago
"When compared to 24 middle-income and high income countries, the U.S. ranks 16th in the amount of inter-generational earnings mobility. The relatively low level of mobility in the U.S. may arise in part because low-income children in the U.S. tend to have less stable and lower-income families, less secure families, and parents who have less time to devote to their children." http://inequality.stanford.edu/sites/default/files/Pathways-SOTU-2016-Economic-Mobility-3.pdf http://inequality.stanford.edu/sites/default/files/Pathways-...
- yummyfajitas 10y ago
  The numbers you quote do not address the point under discussion at all.
  - rfrank 10y ago
    "However, the increase in inequality has also magnified the difference in expected incomes between children born to low-(e.g., bottom-quintile) versus high-(top-quintile) income families. In this sense, mobility has fallen because a child’s income depends more heavily on her parents’ position in the income distribution today than in the past. Since the appropriate definition of inter-generational mobility depends upon one’s normative objective, we characterize the copula and marginal distributions separately in this paper." It would appear we have different normative objectives.
6502nerdface 10y ago
Interesting paper. It actually concludes that reasonable seeming (IMO) definitions of mobility give different results on the question of whether mobility has increased or decreased (or stayed the same) since the 70s. "Based on all of these measures, we find that children entering the labor market today have the same chances of moving up in the income distribution (relative to their parents) as children born in the 1970s. "Although these rank-based measures of mobility have remained stable, income inequality increased over time in our sample, consistent with prior work. Hence, the consequences of the "birth lottery"---the parents to whom a child is born---are larger today than in the past. A useful visual analogy is to envision the income distribution as a ladder, with each percentile representing a different rung. The rungs of the ladder have grown further apart (inequality has increased), but children’s chances of climbing from lower to higher rungs have not changed (rank-based mobility has remained stable). ... "Together, these two facts can be used to construct various measures of mobility. For example, if one defines mobility based on relative positions in the income distribution---e.g., a child’s prospects of rising from the bottom to the top quintile---then intergenerational mobility has remained unchanged in recent decades. If instead one defines mobility based on the probability that a child from a low-income family (e.g., the bottom 20 percent) reaches a fixed upper-income threshold (e.g., $100,000), then mobility has increased because of the increase in inequality. However, the increase in inequality has also magnified the difference in expected incomes between children born to low- (e.g., bottom-quintile) versus high- (top-quintile) income families. In this sense, mobility has fallen because a child’s income depends more heavily on her parents’ position in the income distribution today than in the past."
whybroke 10y ago
No, the result of increased wealth inequality, even if you maintained the same level of social mobility, will worsen not improve situation. The description of a rise in absolute mobility would be a misunderstanding of the issue. If that is too theoretic, consider the analogy of a lottery where one group of children win automatically and an other group has say a 10% chance of winning during their life. Increasing the prize (i.e. a rise in inequity among classes) serves only to worsens the situation not only for the median and average members but the vast bulk of the lower class since those who don't rise (the vast majority) are now even worse off relatively. Or indeed by your logic simply raising the salary of a CEO by a massive amount also raises the "absolute mobility" of all other employees So unless mobility also raises by at least a corresponding amount, any worsening of inequality at birth will only worsen the situation by every meaningful standard. And even then it is probably a bad idea.
- yummyfajitas 10y ago
  Or indeed by your logic simply raising the salary of a CEO by a massive amount also raises the "absolute mobility" of all other employees Yes. If I had a 1% chance of being the CEO and having my income go from $100k to $1M, my expected payoff was $900k x 1% = $9k. If my income stays at $100k but the CEO income goes to $10M, and my odds of being the CEO stay at 1%, my expected payoff is $9.9M x 1% = 99k. My situation has not been worsened and has a possibility of being improved. You seem to think it somehow makes me worse off if my CEO makes more money. Can you explain? Note that I'm not a person prone to envy.
  - whybroke 10y ago
    Or by that logic you could cut your pay from $100K to $1K and give your CEO $10M and be just as happy. There are plenty of people who live on $1K a year after all. Although in the CEO's case, often no further harm is done, if half of a population has a massive increase in wealth while the other half does not then then poorer half must compete for limited resources with a group that will not only drive prices up but can now purchase assets as a form of rent seeking. So in fact, greater inequality acts as currency devaluation for the disadvantaged group. The CEO example was not meant to cause unjustified envy but to show that according to your logic, instead of ever giving employees a raise you could simply give all raises to the CEO and tell employees that by cost benefit analysis the effect is the same, that they are better off. To put it concretely, from now on, every time you ask for a raise just ask that your boss get that extra compensation instead. I think you will find the effect is not remotely the same. Or from now on, ask for all of your pay check that exceeds poverty line for chances at a completely fair trillion dollar lottery. Simple cost benefit multiplication is being erroneously applied in these cases (and often is)

rfrank 10y ago

"When compared to 24 middle-income and high income countries, the U.S. ranks 16th in the amount of inter-generational earnings mobility. The relatively low level of mobility in the U.S. may arise in part because low-income children in the U.S. tend to have less stable and lower-income families, less secure families, and parents who have less time to devote to their children." http://inequality.stanford.edu/sites/default/files/Pathways-SOTU-2016-Economic-Mobility-3.pdf http://inequality.stanford.edu/sites/default/files/Pathways-...

yummyfajitas 10y ago
The numbers you quote do not address the point under discussion at all.
- rfrank 10y ago
  "However, the increase in inequality has also magnified the difference in expected incomes between children born to low-(e.g., bottom-quintile) versus high-(top-quintile) income families. In this sense, mobility has fallen because a child’s income depends more heavily on her parents’ position in the income distribution today than in the past. Since the appropriate definition of inter-generational mobility depends upon one’s normative objective, we characterize the copula and marginal distributions separately in this paper." It would appear we have different normative objectives.

6502nerdface 10y ago

Interesting paper. It actually concludes that reasonable seeming (IMO) definitions of mobility give different results on the question of whether mobility has increased or decreased (or stayed the same) since the 70s. "Based on all of these measures, we find that children entering the labor market today have the same chances of moving up in the income distribution (relative to their parents) as children born in the 1970s. "Although these rank-based measures of mobility have remained stable, income inequality increased over time in our sample, consistent with prior work. Hence, the consequences of the "birth lottery"---the parents to whom a child is born---are larger today than in the past. A useful visual analogy is to envision the income distribution as a ladder, with each percentile representing a different rung. The rungs of the ladder have grown further apart (inequality has increased), but children’s chances of climbing from lower to higher rungs have not changed (rank-based mobility has remained stable). ... "Together, these two facts can be used to construct various measures of mobility. For example, if one defines mobility based on relative positions in the income distribution---e.g., a child’s prospects of rising from the bottom to the top quintile---then intergenerational mobility has remained unchanged in recent decades. If instead one defines mobility based on the probability that a child from a low-income family (e.g., the bottom 20 percent) reaches a fixed upper-income threshold (e.g., $100,000), then mobility has increased because of the increase in inequality. However, the increase in inequality has also magnified the difference in expected incomes between children born to low- (e.g., bottom-quintile) versus high- (top-quintile) income families. In this sense, mobility has fallen because a child’s income depends more heavily on her parents’ position in the income distribution today than in the past."

whybroke 10y ago

No, the result of increased wealth inequality, even if you maintained the same level of social mobility, will worsen not improve situation. The description of a rise in absolute mobility would be a misunderstanding of the issue. If that is too theoretic, consider the analogy of a lottery where one group of children win automatically and an other group has say a 10% chance of winning during their life. Increasing the prize (i.e. a rise in inequity among classes) serves only to worsens the situation not only for the median and average members but the vast bulk of the lower class since those who don't rise (the vast majority) are now even worse off relatively. Or indeed by your logic simply raising the salary of a CEO by a massive amount also raises the "absolute mobility" of all other employees So unless mobility also raises by at least a corresponding amount, any worsening of inequality at birth will only worsen the situation by every meaningful standard. And even then it is probably a bad idea.

yummyfajitas 10y ago
Or indeed by your logic simply raising the salary of a CEO by a massive amount also raises the "absolute mobility" of all other employees Yes. If I had a 1% chance of being the CEO and having my income go from $100k to $1M, my expected payoff was $900k x 1% = $9k. If my income stays at $100k but the CEO income goes to $10M, and my odds of being the CEO stay at 1%, my expected payoff is $9.9M x 1% = 99k. My situation has not been worsened and has a possibility of being improved. You seem to think it somehow makes me worse off if my CEO makes more money. Can you explain? Note that I'm not a person prone to envy.
- whybroke 10y ago
  Or by that logic you could cut your pay from $100K to $1K and give your CEO $10M and be just as happy. There are plenty of people who live on $1K a year after all. Although in the CEO's case, often no further harm is done, if half of a population has a massive increase in wealth while the other half does not then then poorer half must compete for limited resources with a group that will not only drive prices up but can now purchase assets as a form of rent seeking. So in fact, greater inequality acts as currency devaluation for the disadvantaged group. The CEO example was not meant to cause unjustified envy but to show that according to your logic, instead of ever giving employees a raise you could simply give all raises to the CEO and tell employees that by cost benefit analysis the effect is the same, that they are better off. To put it concretely, from now on, every time you ask for a raise just ask that your boss get that extra compensation instead. I think you will find the effect is not remotely the same. Or from now on, ask for all of your pay check that exceeds poverty line for chances at a completely fair trillion dollar lottery. Simple cost benefit multiplication is being erroneously applied in these cases (and often is)