If there has been one casualty of the Great Recession, it’s the “American dream “– the idea that no matter where you come from, everyone has a fair shot at a good life.
Study after study has painted a picture of a much different reality, but none has been as clear as a new report on income mobility out of Harvard University this week.
In “The Economic Impacts of Tax Expenditures,” researchers zeroed in on how factors like geography, tax rates and family life impacted the upward mobility of children raised in the 1980s and 1990s.
Surprisingly, “the vast majority of difference in mobility” had nothing to do with living in areas of high economic growth.
What matters most, they found, was the structure income classes, the quality of K-12 school systems, family and, surprisingly, religion.
A robust middle class makes all the difference. While a higher concentration of wealthy residents didn’t seem to matter much, the researchers found that in areas where poor people were segregated from the middle class, their children had a lower chance of moving up the income ladder.
And wherever school children scored highest on standardized testing and school districts spent more per student, dropout rates were lower and children had higher rates of upward mobility.
But above all else, family life and the social structure offered by religious beliefs played the most pivotal role in children’s’ outcomes.
“For instance, high upward mobility areas tended to have higher fractions of religious individuals and fewer children raised by single parents,” the researchers write. “Each of these correlations remained strong even after controlling for measures of tax expenditures.”
Speaking of tax expenditures, the study found larger tax credits for the poor and higher taxes for the wealthy actually only slightly helped to improve children’s’ income mobility.
There were some regional trends as well, but geography seemed to matter least for high-income children and most for poor and middle class kids. Regions in the Southeast and Midwest were toughest for upward mobility, and cities like Atlanta, Charlotte and Cincinnati were among the toughest areas to move up (see map above).
On the flip side, kids living in Northeast and Western cities like New York, Boston and Seattle had better odds of moving up.
So where do we go from here?
If you’re an Atlanta parent with teenagers at home, moving them to another city or state won’t really do much good. The researchers found that after the age of 13, moving didn’t do much to improve children’s chances at higher income mobility. And switching neighborhoods matters significantly less as children get older, as well.
The researchers signed off on the study with this big fat disclaimer:
“We caution that all of the findings in this study are correlational and cannot be interpreted as causal effects. What is clear from this research is that there is substantial variation in the United States in the prospects for escaping poverty…Understanding the features of these areas – and how we can improve mobility in areas that currently have lower rates of mobility – is an important question for future research that we and other social scientists are exploring.”
They’re being a little humble here. Study after study has seemed to confirm their findings over the last decade or so. Most recently, a telling report by Washington, D.C.-based think tank, The Hamilton Project, highlighted economic data that showed how income inequality factored deeply into children’s’ social mobility in America. In that report, they drove home the notion that access to education and a sound family structure also gave children the best shot at winding up better off than their parents.
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