Stanford Center on Poverty & Inequality
450 Serra Mall, Building 80
Stanford, CA 94305-7208
NBER Working Papers and Publications
|December 2016||The Fading American Dream: Trends in Absolute Income Mobility Since 1940|
with Raj Chetty, Maximilian Hell, Nathaniel Hendren, Robert Manduca, Jimmy Narang: w22910
We estimate rates of “absolute income mobility” – the fraction of children who earn more than their parents – by combining historical data from Census and CPS cross-sections with panel data for recent birth cohorts from de-identified tax records. Our approach overcomes the key data limitation that has hampered research on trends in intergenerational mobility: the lack of large panel datasets linking parents and children. We find that rates of absolute mobility have fallen from approximately 90%for children born in 1940 to 50% for children born in the 1980s. The result that absolute mobility has fallen sharply over the past half century is robust to the choice of price deflator, the definition of income, and accounting for taxes and transfers. In counterfactual simulations, we find that inc...
Published: Raj Chetty & David Grusky & Maximilian Hell & Nathaniel Hendren & Robert Manduca & Jimmy Narang, 2017. "The fading American dream: Trends in absolute income mobility since 1940," Science, vol 356(6336), pages 398-406.