Middle-Out Mobility – Regions with Larger Middle Classes Have More Economic Mobility

Source: Ben Olinsky and Sasha Post, Center for American Progress, September 4, 2013

From the summary:
…Last month, four economists from Harvard University and the University of California, Berkeley—Raj Chetty, Nathaniel Hendren, Patrick Kline, and Emmanuel Saez—made an important contribution to this effort by releasing a comprehensive study of intergenerational income mobility across the United States. Their study revealed not only that mobility varies substantially across metropolitan areas and other geographic regions, but that these variations are associated with a number of regional characteristics, such as school quality, civic and religious engagement, the share of single-parent families, and geographic sprawl. In other words, the variation in economic mobility is not random. Some characteristics likely improve mobility, while others dampen it.

By using the same data and methodology employed by Chetty and his colleagues, we can see that one of the most important characteristics is the size of the region’s middle class. Put simply, the data show that when a region has a larger middle class, its low-income children are likely to be more upwardly mobile. Indeed, the size of a region’s middle class is a stronger predictor of economic mobility than all but 2 of the 28 regional characteristics that the study’s authors tested.

This finding—that the middle class and mobility are strongly related—is very much in line with recent research that shows a negative correlation between intergenerational mobility and economic inequality. International studies have shown that countries with more inequality have less economic mobility, a relationship termed the “Great Gatsby Curve” by Alan Krueger, the former chairman of President Barack Obama’s Council of Economic Advisers. Now we know, based on the study from Chetty and his co-authors, that this relationship is true right here within the United States, not only across countries….