New Economic Mobility Research

New research led by Raj Chetty of Opportunity Insights, released in July 2024, highlights how community-level changes reduced Black-white gaps in economic mobility but amplified gaps by parental income.  

Using data on 57 million children, they show that intergenerational mobility changed rapidly by race and class in recent decades. For white children in the U.S. born between 1978 and 1992, earnings increased for children from high-income families but decreased for children from low-income families, increasing earnings gaps by parental income (“class”) by 30%. Earnings increased for Black children at all parental income levels, reducing white-Black earnings gaps for children from low-income families by 30%. Class gaps grew and race gaps shrank similarly for non-monetary outcomes such as educational attainment, standardized test scores, and mortality rates.

The divergent trends in economic mobility were caused by differential changes in childhood environments, as proxied by parental employment rates, within local communities defined by race, class, and childhood county. Outcomes improve across birth cohorts for children who grow up in communities with increasing parental employment rates, with larger effects for children who move to such communities at younger ages. Children’s outcomes are most strongly related to the parental employment rates of peers they are more likely to interact with, such as those in their own birth cohort, suggesting that the relationship between children’s outcomes and parental employment rates is mediated by social interaction. The findings imply that community-level changes in one generation can propagate to the next generation and thereby generate rapid changes in economic mobility.