Economic mobility

Economic mobility is the ability of an individual, family or some other group to improve (or lower) their economic status—usually measured in income. Economic mobility is often measured by movement between income quintiles. Economic mobility may be considered a type of social mobility, which is often measured in change in income.

There are many different ideas in the literature as to what constitutes a good mathematical measure of mobility, each with their own advantages and drawbacks.

Mobility may be between generations ("inter-generational") or within a person or groups lifetime ("intra-generational"). It may be "absolute" or "relative".

Inter-generational mobility compares a person’s (or group's) income to that of her/his/their parents. Intra-generational mobility, in contrast, refers to movement up or down over the course of a working career. Absolute mobility involves widespread economic growth and answers the question “To what extent do families improve their incomes over a generation?” Relative mobility is specific to individuals or groups and occurs without relation to the economy as a whole. It answers the question, "how closely are the economic fortunes of children tied to that of their parents?" Relative mobility is a zero-sum game, absolute is not.

How much economic mobility really exists has been studied.

According to the 2007 "American Dream Report" study, "by some measurements"—relative mobility between generations -- "we are actually a less mobile society than many other nations, including Canada, France, Germany and most Scandinavian countries. This challenges the notion of America as the land of opportunity." Other research places the U.S. among the least economically mobile countries.

Another 2007 study ("Economic Mobility Project: Across Generations") found significant upward "absolute" mobility from the late 1960s to 2007, with two-thirds of those who were children in 1968 reporting more household income than their parents (although most of this growth in total family income can be attributed to the increasing number of women who work since male earnings have stayed relatively stable throughout this time).

However, in terms of relative mobility it stated: "contrary to American beliefs about equality of opportunity, a child’s economic position is heavily influenced by that of his or her parents." 42% of children born to parents in the bottom fifth of the income distribution ("quintile") remain in the bottom, while 39% born to parents in the top fifth remain at the top. Only half of the generation studied exceeded their parents economic standing by moving up one or more quintiles. Moving between quintiles is more frequent in the middle quintiles (2-4) than in the lowest and highest quintiles. Of those in one of the quintiles 2-4 in 1996, approximately 35% stayed in the same quintile; and approximately 22% went up one quintile or down one quintile (moves of more than one quintile are rarer). 39% of those who were born into the top quintile as children in 1968 are likely to stay there, and 23% end up in the fourth quintile. Children previously from lower-income families had only a 1% chance of having an income that ranks in the top 5%. On the other hand, the children of wealthy families have a 22% chance of reaching the top 5%.

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