How can we improve economic opportunities for our children?
The Equality of Opportunity Project uses big data to identify new pathways to upward mobility.
Children's prospects of achieving the "American Dream" of earning more than their parents have fallen from 90% to 50% over the past half century. This decline has occurred throughout the parental income distribution, for children from both low and high income families, as shown in the chart below.
Most of the decline is due to the more unequal distribution of economic growth in recent decades rather than the slowdown in GDP growth. Increasing economic growth rates to the higher levels experienced in mid-century America would increase the fraction of children earning more than their parents to 62%. Spreading the existing growth more broadly across the income distribution would raise the level to 80%.
The American Dream continues to thrive in some parts of the country. As the map below shows, chances of rising out of poverty vary widely across cities in America for children born in the 1980s.
The differences in upward mobility across areas are caused by differences in childhood environment. Every year of exposure to a better environment improves a child’s chances of success, based on an experimental study of housing voucher recipients and a study of five million families who moved across areas, illustrated in the chart below.
The fading of the American Dream is not
immutable. There are cities throughout America — such as Salt Lake
City and Minneapolis — where children's chances of moving up out of
poverty remain high. Cities with high levels of upward mobility tend
to have five characteristics: lower levels of residential segregation,
a larger middle class, stronger families, greater social capital, and
higher quality public schools.
We continue to study what policies can promote upward mobility and provide data to help others join in the effort to revive the American Dream.