Where you grow up in the US has a major impact on your financial future, according to research by Harvard economics professor Raj Chetty.
Chetty (and his team) calculated the upward mobility for all metro and rural areas in the US by using anonymous earnings records on 10 million children born between 1980-1982. They classified the children based on where they grew up, and tracked where they lived as adults.
The team then came up with this map, which shows the probability that a child who was born in the bottom fifth income distribution in a particular area will reach the top fifth later in life. The results are pretty startling.
Many areas in the southeast have a less than 6.1% chance (and sometimes even less than 4.8%) that a bottom-income-level child will ever reach the top fifth. On the flip side, some areas in the center of the country sometimes eclipse 16.8%.
“[T]he economic outcomes of children from low income families vary substantially within the US. Some cities have rates of upward mobility comparable to the most mobile countries in the world, while other have lower rates of mobility than any developed country,” writes Chetty in an executive summary.
“These geographical difference in upward mobility are strongly correlated with five primary factors: segregation, income inequality, local school quality, social capital, and family structure.”
And Chetty then goes one step further and suggests that places have actually have causal effect on upward mobility for a given child.
“For example, children who move from Washington DC to Fairfax county at younger ages earn more as adults. [This] implies that Fairfax has a positive effect relative to DC,” Chetty wrote in a presentation on the subject.
If you’re interested in Chetty’s full report (and how everything was calculated), check it out here.
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