Economy Now

Instant reaction and smart charts on economic trends.

Cities with the most (and least) upward mobility

July 24, 2013: 6:00 AM ET


Getting ahead in America has a lot to do with where you live.

Many communities in the United States, particularly the Southeast, have low economic mobility, a new study from researchers at Harvard University and University of California, Berkeley, found. But people living in communities in the northern Plains and Rocky Mountain states are more likely to rise higher.

Take a household in Greenville, Miss. in the 25th income percentile. Their children are only expected to rise to the 34th income percentile at age 30. But a household of the same income in Bismarck, N.D., would on average see their children jump to nearly the 54th income percentile.

The academics -- Raj Chetty and Nathaniel Hendren of Harvard and Patrick Kline and Emmanuel Saez of Berkeley -- looked at 741 metro and rural areas across the nation. They compared the household income of children born in 1980 or 1981 when they were about 30 years old and then measured their parents' household income between 1996 and 2000. These findings are a part of their work focused on whether tax breaks, such as the Earned Income Tax Credit, effectively promote economic mobility.

What they found was that other social and economic characteristics are more closely correlated with people's ability to move up the income ladder.

For instance, the more single moms in a community, the less upward mobility for their children, but also for the kids of married couples in the same area. High divorce rates, high school dropouts and teen births also depress upward mobility.

Also, the share of black residents in an area, as well as their level of segregation within a community, affects mobility for all residents. Whites living in places with high percentages of black residents who live in isolated neighborhoods also have less mobility.

"It's something about the places, not the characteristics of the people in the places," said Nathaniel Hendren, an assistant professor of economics at Harvard.

On the flip side, places where parents have high "social capital" levels -- a propensity to "do the right thing" -- are more likely to have more economic mobility. The quality of the schools and religiosity of the family are also factors in children moving on up.

The professors did not dig down into the causes of the economic mobility variations, only the correlation. But they recommended more research into the drivers of economic mobility.

"We should look at what places are doing that promotes opportunity for people," Hendren said.

Join the Conversation
About This Author
Tami Luhby
Tami Luhby
Senior writer, CNNMoney

Tami Luhby is a senior writer at CNNMoney and covers income inequality, state fiscal problems, unemployment, housing policy and other economic issues. Luhby previously covered personal finance for Newsday and banking for Crain's New York Business.

Powered by VIP.