Climbing the Income Ladder

http://www.nytimes.com/2013/07/22/business/in-climbing-income-ladder-location-matters.html?emc=eta1

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"I suppose leadership at one time meant muscles. But today it means getting along with people." (Mahatma Gandhi)

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According to a new study that other researchers are calling the most detailed portrait yet of income mobility in the U.S., "where you grow up matters." The study is based on millions of anonymous earnings records and is the first to compare upward mobility across metropolitan areas.

So, climbing the income ladder occurs less often in the Southeast and industrial Midwest with the odds notably low in places like Atlanta and Charlotte.

According to Nathan Hendren, a Harvard economist: "There is tremendous variation across the U.S. in the extent that kids can rise out of poverty." The variation does not come simply from the fact that some areas have higher average incomes: upward mobility rates, Hendren notes,  often differ sharply in areas where average income is similar, like Atlanta and Seattle.

The "interactive map" alone is worth the time to look at the study data. A sweep of the color coded U.S. map yields (by county) the chances a child raised in the bottom fifth rose to the top fifth ($70,000 by the age of 30 or $100,000 by the age of 45) in his/her career.

The researches identified four factors that appeared to affect income mobility, including the size and dispersion of the local middles class. All else being equal, upward mobility tended to be higher in metropolitan areas where poor families were dispersed among mixed-income neighborhoods.

In previous studies of mobility, economists have found that a smaller percentage of people escaped childhood poverty in the United States than in several other rich countries including Canada, Australia, France, Germany and Japan. This latest study is consistent with those findings.

For me, I find it especially interesting that children who moved at a young age from a low-mobility area to a high-mobility area did almost as well as those who spent their entire childhoods in a higher-mobility area. But children who moved as teenagers did less well.

For economists, the comparison of metropolitan areas allows researchers to consider local factors that previous studies could not.

Brilliant work!