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Home Publications Blogs Beat the Press Mobility and Inequality: More on Non-New Findings

Mobility and Inequality: More on Non-New Findings

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Thursday, 30 January 2014 06:08

Robert Samuelson is happy to tell us that contrary to what he hoped some of us believed, there was not much change in mobility for children entering the labor force between the first President Bush and second President Bush's administrations. Samuelson misrepresents the study to imply that it finds that there has been no change in mobility over the post-war period.

"By the conventional wisdom, American society is becoming more rigid. People’s place on the economic ladder (“relative mobility”) is increasingly fixed.

"Untrue, concludes the NBER study."

Samuelson then notes the study's finding that there has been little change in mobility for workers entering the labor market in 2007 compared to 1990. The study then refers to earlier work finding no change in mobility prior to 1990. This study did not itself examine the period prior to 1990.

This is important since that is the period in which we might have expected growing inequality to have a notable impact on mobility. There was some divergence between quintiles of income distribution in the 1980s. In the years since 1980, there has not been much divergence between the bottom half of the top quintile and the rest of the income distribution. Most of the inequality was associated with the pulling away of the one percent from everyone else. This study made no effort to examine mobility into the one percent.

As far as mobility in the years prior to the 1990, contrary to the claim of this study, the research is far from conclusive. For example, an assessment published by the Cleveland Fed concluded:

"After staying relatively stable for several decades, intergenerational mobility appears to have declined sharply at some point between 1980 and 1990, a period in which both income inequality and the economic returns to education rose sharply. This finding is also consistent with theoretical models of intergenerational mobility that emphasize the role of human capital formation. There is fairly consistent evidence that intergenerational mobility has stayed roughly constant since 1990 but remains below the rates of mobility experienced from 1950 to 1980."

While it would be wrong to take this statement as conclusive, it is also wrong to take the assessment of the study cited by Samuelson as conclusive and it is a gross misrepresentation to imply that this study examined patterns in mobility over the whole post-war period. It did not even try to examine changes in mobility over the 1980s, the period when patterns in inequality would have most likely led to a decline in mobility. 

 

Note: Link fixed, thanks Dennis.

Comments (11)Add Comment
Lousy job market
written by jonny bakho, January 30, 2014 7:47
More importantly the Malefactors of Great Wealth are raking in the profits by paying non-living wages and low or no taxes. The are blocking job creation efforts because they have a selfish interest in cheap labor. Young people are entering a job market with high unemployment and low wages. Studies show that most will not make up the earnings loss in their life time. We have sacrificed the future of our youth to the banksters and corporate greed.

This job market sucks. It just might increase mobility- downward.
What's Wrong With the Latest Picture of Inequality - Mobility Misses the Point
written by Last Mover, January 30, 2014 8:20

Four things:

First is the huge and rapidly expanding gap between the top levels of income and wealth, and those below them, an entirely different question than mobility between and among them.

Second is the standard conservative response that the issue is whether those from the bottom up are improving - not whether the upper levels are moving up much faster than those below them.

As Paul Krugman said recently on his NYT blog, "they have cell phones don't they" is a standard response from the sock puppets for the rich, offensively tossed out as a bone to justify the two conditions above.

Third therefore, mobility per se cannot be the essential problem. Think of it this way. Suppose there was very high turnover between each designated percentile and the one above it, or even across percentiles regardless of rank.

What does that achieve? It just means different people get to trade places and share in the pillaged and plundered take of huge monopoly economic rent in the levels of above them.

True, if mobility was somehow made magical with enough penetration to enter any market by any player in musical chair fashion with very high rates of frequency for entry and exit - income and wealth distribution would indeed change.

But the fatally flawed economic structure dragging down America over the last 30 years would not change. Instead the free market lies behind inequality that actually created it, that produced the undeserving concentrated rich who produce little or no added value - alongside huge negative value - would continue.

The only difference would be that an artificial mobility introduced into a failed economic structure would insanely bless and condone the same march America is on to ultimate economic destruction. It would be like a musical chair game where everyone gets to be "economic predator for a year", stepping down for the next one to play the same role.

This is why Americans are turning on each other so viciously now. Everyone is desperate enough to jump on board whatever path offers a means of economic survival, and if that means dumping your fellow Americans in order to catch a ride with the economic predators in the name of mobility, so be it.

The only way to achieve true, effective mobility is to break the market and political power of the economic predators running America today. Absent open competitive entry opportunity into these obscenely fake free markets created by the economic predators, mobility becomes a redundant, useless after the fact result - not an operative economic force that creates true equality and legitimate inequality associated with effective competition and a level playing field for all.

The forth and final point on inequality is to end the insane dichotomy rants on "government versus private sector" anything. There's three kinds of economic efficiency: Productive efficiency, allocative efficiency and distributive efficiency.

Each is about keeping the economic pie as large as possible, including in particular having an economy that operates at full potential at the macro level. Each is hopelessly intertwined between government and private entities.

America, economic inequality is not a hopelessly stupid Dimwit Dubya black and white manichean thing about "you're either with us or you're against us" via the private or public sector - unless of course, Dubya was talking about econonic predators instead of terrorists. In that case of course, he would be exactly right.
Market Fakers
written by Squeezed Turnip, January 30, 2014 9:05
Market makers became market fakers (in the seventies).

Who put the 'con' in ' Con Ed'? Market fakers.

Who put the 'con' in 'Congress'? Market fakers.

Who put the 'con' in 'conservative'? Market fakers.

Who put the 'dim' in 'Dimon'? Market fakers.

Who can't sail this country out of this economic doldrum? Market fakers.
The link to the Samuelson article is wrong
written by Dennis, January 30, 2014 9:38
Both links point to your previous article.
...
written by skeptonomist, January 30, 2014 10:02
In a "free-market" or capitalist system, mobility is supposed to be good overall because it is increases incentive, especially for businesspeople. They should innovate and do other constructive things because of the chance of moving up. There have certainly been big changes over the last 50 years or so - tax progressivity has come way down and there has been a great deal of deregulation. Has this increased mobility, thereby increasing incentive? The lack of a great increase in mobility - among other things - shows that the changes have generally failed in their objectives.
The Real Reason the Chetty Study is a 'Landmark'
written by Hugh Sansom, January 30, 2014 10:42
The amount of hype the Chetty study has gotten is quite astonishing, but not surprising. First, we have to remember the lengths to which Harvard goes to present anything that happens at Harvard as more earth-shattering than everything that happens anywhere else. It is easy to role ones eyes at this, but it is part of the politics and economics of academia. We see much the same in the lobbying for Nobel Prizes — one of the reasons why some, like physicist N. David Mermin, have so strongly criticized prizes generally. It is also, in my opinion, a reason for the public ownership of all universities.

The more important reason this is a 'landmark' study in the eyes of NPR or New York Times or Post pundits and editors is that it fits very nicely into the outcomes that they find tolerable. The Bill Kellers or Robert Samuelsons or Cokie Robertses embrace inequality. That want more inequality. They firmly believe that the privileged are innately superior. This cannot be overemphasized.

Here is 'noted' Harvard economist Gregory Mankiw: "Smart parents make more money and pass those good genes on to their offspring."

This is a pervasive and growing conviction among American conservatives and moderates and no small percentage of progressives. (And not just among Americans.) It is reflected in the cultish adoration of evolutionary psychology and evolutionary economics, and the gross misunderstandings of genetics and biology common among people generally, social scientists, and even many biologists. Stephen Jay Gould was an outstanding thinker on these issues. Richard Lewontin and others still write on these matters.
...
written by Marko, January 30, 2014 11:33
It's all about the 1%

"...Most of the inequality was associated with the pulling away of the one percent from everyone else. This study made no effort to examine mobility into the one percent."

Precisely. All studies on inequality and/or mobility that restrict their analysis to income deciles or quintiles , or income ratios like 90/10 , 90/50 , 50/10 , etc. , are merely distractions.

Between our somewhat progressive tax system , gov't transfers , and , especially , credit growth , the relative financial resources available to different levels within the bottom 90% has not changed much in the past several decades , so one wouldn't expect to see much impact on mobility within that range. What HAS changed is that the bottom 90% has suffered a big relative decline in living standards compared to those at the very top , as well as compared to overall economic growth.

These studies are simply attempts to shift our attention from where the real action is - the top 1%.
...
written by kharris, January 30, 2014 12:01
skeptonomist, nicely written.
I thought 1968 was peak equality (post 1920s)?
written by pete, January 30, 2014 3:14
The 1920s had relatively high inequality, at the end of the industrial revolution. Similarly, since the advent of the PC in the mid 1980s, the emphasis has increasingly been on technology and its use. This is where productivity has skyrocketed, and and its associated compensation. Mopping floors has not changed much due to technology. Car mechanics have about the same productivity, though there is computer diagnostics. Still gotta turn the wrench. Same with autobody work. I don't know why there is so much surprise. Most likely, in 20 years, the concentrated wealth of the Waltons, Buffetts, Jobs, etc. will dissipate, much like the Kennedy, Rockefeller, Vanderbilt, Carnegie wealth dissipated.
This is common on the far right
written by Robert Weiler, January 31, 2014 12:53
I've noticed this phenomena before with right wing pundits. If you have some area that is extremely well researched and there is a broad consensus but they disagree with the results, say evolution or climate change, then the attitude is that 'we still don't know enough'. If it is a result they like, say a study that shows that Medicaid doesn't improve health or that there is low mobility between economic groups, or the minimum wage doesn't reduce employment, then all it takes is one study to know absolutely for sure, even if it is contradicted by all of the other research.
Keeping Workers disposable and un-unioned
written by Squeeky Wheel, February 03, 2014 1:01

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Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.

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