Sunday, May 14, 2006

Income Immobility In The U.S.A.

Compared to other advanced industrial economies, wealth and income in the United States is distributed very unevenly. Mobility is low as well. In countering illusions and right-wing lies on the latter point, I have usually cited Gottschalk and Danziger (1997). They use data from the Panel Study of Income Dynamics (PSID). I need to update my understanding to reflect Hertz (2006), who also uses the PSID. I could also look at some other articles listed in the references to this post.

Both Gottschalk and Danziger (1997) and Hertz (2006) report a variety of analyses, investigating how robust their results are and the impact of various variables (e.g., race, education) on their results. I think Table 1 provides a useful summary of a central result from Gottschalk and Danziger. They have data on the income quintiles of the families of 1,909 persons in 1968 and 1991. They find that over approximately a quarter century, about two thirds or more of these people end up in families within one quintile of the families within which they start.

Table 1: Two-Thirds End Up In Families Within One Quintile Of Starting Family
1st Quintile46.9%25.1%17.7%9.0%1.3%
2nd Quintile24.224.822.319.19.7
3rd Quintile10.820.520.527.021.2
4th Quintile10.416.427.020.425.9
5th Quintile7.513.013.724.241.6

  • Bowles, Samuel and Herbert Gintis (2002). "The Inheritance of Inequality", Journal of Economic Perspectives, V. 16, N. 3: 3-30.
  • Gottschalk, Peter and Sheldon Danziger (1997). "Family Income Mobility - How Much Is There and Has It Changed?", (Draft?) (Dec)
  • Hertz, Tom (2006). "Understanding Mobility in America", American University for the Center for American Progress (26 Apr)
  • Mazumder, Bhashkar (2005). "Fortunate Sons: New Estimates of Intergenerational Mobility in the United States Using Social Security Earnings Data", Review of Economics and Statistics, V. 87, N. 2: 235-255


David said...

Interesting post, but do you have the income mobility of other developed nations with which to compare?

Robert Vienneau said...

Yes, sort of.

The post lists some articles to read (e.g., by me). Figure 2 in Hertz (2006) shows that, of the countries examined, only the U.K. has less intergenerational mobility than the U.S. Hertz cites Corak (2004), a paper published at a symposium in Paris.

And I have found that the Bowles and Gintis paper I cited was part of a JEP symposium. Skimming through the contribution of Gary Solon to that symposium, I find the U.S. and the U.K. stick out there too as having less mobility than other coutries.