Economist Raj Chetty was interviewed on Steve Levitt’s People I (Mostly) Admire podcast in September 2022, where he discussed his research on intergenerational mobility in the United States. Chetty shared two stunning facts from his research, one being that of American children born in 1940, 90% would grow up to earn more than their parents, but now, 50 years later, less than half of people grow up to earn more than their parents.
Raj Chetty:
We have an enormous amount of growth over the past 30 years. And on average, we have a lot more total output. People are richer, on average, than they were 30 years ago. So, how can it be that only 50 percent of kids are doing better than their parents? And the answer is, take an extreme example. Suppose one person — say, Jeff Bezos or Bill Gates —got all of the gains in G.D.P. over the past 30 years. Then you could have a tremendous amount of G.D.P. growth and you’d still have only 50 percent of kids doing better than their parents.
Using historical IRS data, he has created an extraordinary resource at opportunityatlas.org where you can type in an address and look up children’s likelihood of earning an income that exceeds their parents at the age of 35. I lost a couple of hours on the site. Highly recommended.