(sgale39/Flickr)

Geography plays a key role in income mobility, according to a new study which examined millions of earnings records. It’s much easier for a child to rise out of poverty in cities like Boston or Seattle than in Atlanta or Columbus. We’ll discuss the findings, and what role tax policies play in improving income mobility.

Guests:
Enrico Moretti, professor of economics at UC Berkeley and author of "The New Geography of Jobs"
Nathaniel Hendren, assistant professor of economics at Harvard University and co-author of the study, "The Economic Impacts of Tax Expenditures: Evidence from Spatial Variation Across the U.S."

  • Beth Grant DeRoos

    Boston and Seattle also are cities where the entire community sees the long term cost in NOT encouraging people to get out of poverty. They are also cities who have been on the forefront of environmental issues, encouraging living in smaller places, walking more, and even being vegan/vegetarian. Their leaders lead by example and people want to follow.

    Whereas Columbus and Atlanta are cities with generational poverty that has built a system that supports those who serve people in poverty rather than serve people whom the community wants out of poverty. Same with places like Detroit, Trenton NJ, Oakland CA. And you cannot blame black mayors for Columbus and Atlanta’s problems because Seattle as an example has had great black mayors going back to ’89.

    • Valerie

      I see every day that you comment on the teaser for forum long before the show has aired Beth. No offense, but don’t you think your comments would hold more weight if you were actually listening to the issue at hand? I don’t see anywhere in the teaser Black mayors being mentioned, nor have they been mentioned in the show at this point.

      • Beth Grant DeRoos

        First off Valerie I do NOT post comments every day as you wrote. I go weeks and weeks, days and days without posting any thing!! Do your homework and check allllll the shows for the last month and see how often I did NOT post any thing.

        No, black mayors were not mentioned but being well read on the subject I know some folks assume Atlanta and other cities with black mayors is why the cities remain poorer. TIME, Newsweek, business magazines NYTimes have ALL done extensive articles on this fact.

        Whereas Seattle as an exampe have had black mayors who wanted to break the cycle and not be a city that relied on revenue based on supporting those in poverty.

        So many people assume Seattle being Microsoft country is also run by richer white folks, when in fact they have tapped into the ethnic richness their citizens provide.

  • Chomsky_P

    Your income measure does not include non-salary benefits, which have become a larger and larger share, thus affecting children more than parents. This would affect your results only if benefits were growing larger in certain areas that correlated with your tax expenditure data. What are your thoughts here?

    • TrainedHistorian

      But far more important in determining real income is cost of living, especially nowadays, cost of housing. Which raises a question here: does this study exaggerate how well people living in or moving to the SF Bay Area are doing because it only looks at nominal incomes rather than real incomes (nominal income minus prices, largely housing prices). Without that adjustment, the study is practically worthless.

  • geraldfnord

    To what do people attribute failure to move upward in themselves, people they like, and people they dislike? I was very struck to read the unattributed factoid that well over half the unemployed men surveyed blamed themselves alone for their state…at the height of the Great Depression—but on the other hand, when considering why _they_ aren’t rich like people on TV, there seem to be many who’ll blame the Gummint, the Masons, the Media, the Mexicans, the Feminists, the Man, the Ungodly, and anyone else handy before themselves….

    Why is it so good in Denmark? Obviously, it must be because their socialistic policies and nearly completely secular society sap their wills and moral fibres (well, that would be invoked if they were worse-off than we….)

  • Razib_Taif1

    Very interesting. The study states that high upward mobility areas tended to have higher fractions of religious individuals and fewer children raised by single parents. However, when I look at the map, I see the Bay Area (an area I assume to have low religiosity) with high economic mobility and the South (an area with high religiosity) with lower economic mobility. Is this determinate simply overpowered by others?

  • geraldfnord

    Sorry to comment twice, but:

    The wealthier are drawn to wealthier places, and I think the main determinant of how wealthy a place will be is how wealthy it’s been—we _say_ that much is expected of those to whom much has been given, but in truth they usually seem to be pretty good at getting even more without giving back all that much…Kurt Vonnegut’s Eliot Rosewater’s parable of the Money River seems apposite.

  • Guest

    When did “income mobility” become equated with “upward mobility” and is there a study of places where downward mobility is more likely, whether or not correlated with this one?

    • geraldfnord

      And, for that matter, what about ‘wealth mobility’, with which income mobility must have some correlation, but likely far from a full?

  • Ben

    I’m not familiar with this particular study, but was there any look at a correlation between historical levels of racism in a particular geographic region and upward mobility? Similarly, is there any consideration to downward mobility rates for the various ethnic and class groups vs. upward mobility?

    Ben

    • jurgispilis

      At one extreme you have a country like India with a historic racist caste system in place, which stymies upward mobility. We have racism and intolerance in this country, but it pales compared to what you find in the rest of the world.

      • TrainedHistorian

        India does have caste, which does stymie upward mobility, but it’s not “racial” i.e. based on race.

        • Kurt thialfad

          On what then is it based?

          • TrainedHistorian

            Short answer to complex question: caste is based on the notion of “ritual purity.” Among the determinants of one’s “ritual purity” are one’s occupation; certain occupations (e.g. handling dead animal products) were considered more “impure” than others.(In some regions, some occupational groups even got classified as “untouchable).” Priestly caste was believed more “pure” than merchant and warrior castes, etc. Since one was expected, even pressured, to follow parents’ occupation and marry within one’s caste, one can see how these ideas would stymie upward mobility.

  • Lesley Allen

    $100,000 salary goes a lot farther in Charlitte than in SF. Why is mobility defined in straight dollars rather than relative to the cost of living?

    • TrainedHistorian

      Excellent point.

    • Denarius

      What differs greatly between regions is the cost of housing and the salaries. A loaf of bread, a ton of bricks, a laptop computer generally cost the same everywhere.

  • jurgispilis

    What is the impact of immigration on the study, keeping in mind that California has the highest foreign born popular of any state, both illegal and legal? A foreigner who has a high status in his native country, comes to America, and immediately starts working at the lowest rung on the economic ladder. Think, Soviet doctor working as a cab driver.

    The case study continues, as the foreign profession acquires his US certifications and supplemental education, he rises rapidly on the economic ladder. How prevelant is this particular situation in California, and does your study measure this?

  • Kurt thialfad

    As he mentioned, the expenditure on education in California is low, yet mobility is high because … we import our educated people. Hi-tech workers on H1-B visas get their education abroad. So the state education could be crap, but the state economy could do well, because basically, the job of providing education has been “out sourced”.

  • Mood_Indigo

    I have the opinion the causation behind these observed correlations of economic mobility are based on a few simple human attributes.
    1. The IMPORTANCE that the parent(s) attach to education (not necessarily the educational attainment of the parents themselves).
    2. The value system of the parents (postponed gratification, strong sense of responsibility, etc.).

    Using these two (and may be one or two attributes) as as mechanistic model, I believe I can explain all the data correlations. Not only that, I can even postulate situations where these correlations will be violated.

    I was just having a office cooler discussion with my Vietnamese colleague (I’m from India) on this program. We agreed that if you put 50,000 poor Vietnamese and 50,000 Indians immigrants in a single U.S. town, the populations will be segregated but highly economically mobile. You can bet on it. And instead of bowling alleys, the common platform will be public school science clubs.

    • Mood_Indigo

      Furthermore, this analysis is what we would refer to in fluids engineering as a Eulerian approach where one studies flow through a fixed spatial location (control volume) as these researchers do vis-a-vis geographical location. The opposite is the Lagrangian approach where one studies the attributes of the fluid particles that pass through the volume. How would you understand which attributes of the types of people self-selected the geographical locations studied?

      • Robert Thomas

        Mood_Indigo, Hhw is one to understand the last sentence of your paragraph – the one starting “How would you understand…”? There appear to be words missing.

        • Mood_Indigo

          Yes. You are right. I meant to comment that certain geographical locations like the Bay Area and the Pacific northwest may show economic mobility because they also attract people from other parts of the country who possess certain values that foster economic mobility, for example, those engaged in the knowledge economy.

          Perhaps the data will be parsed to exclude people who move from one place to another, and consider only those who stayed in the same region.

          • Robert Thomas

            I’m not certain, but I think I heard professor Hendren say that the statistics used were attached to the individuals’ residence at age sixteen.

    • TrainedHistorian

      Highly simplistic.. The Vietnamese and Indian immigrant population to the US is not a random sample across class. Because of geographical distances, we do not get the poorest low-caste Indians; rather we get Indians with the education and wherewithal to immigrate legally. The Vietnam-born population here is disproportionately political refugee: those associated with the anti-communist regime, not the poorest peasant class. If the poorest low caste Indians and the poorest Vietnamese peasants immigrated here instead one would no doubt would see them more interested in the Indian and Vietnamese equivalents of the “bowling alley” too.

      Because of geography, and an unwillingness to enforce the immigration laws of 1986 & 1965, we DO draw large numbers of lower income level Mexicans and C. Americans. Hence their (and our) problem in getting their kids to get significantly more education than they got themselves, a phenomenon alluded to by the guests. (Lower income folks tend not to be willing or able to bear the long term cost of staying out of the workforce for more education). As for the bulk of the US population of European ancestry, one must keep in mind their class background too. Most whose ancestors came before 1900 ended up as farm workers or miners, not engineers or other professionals, because that was the basis of the US economy. From 1900-1965 a lot also came to be in industrial laborers. If you had kept that in mind, you might have refrained from snobbish remarks about the “bowling alley.”

      Finally of course the native-born black population is descended from those who brought no capital but were rather the capital of others.Then, like large parts of the white population, they were mainly agricultural and industrial workers. Even worse, until the 1960s most were deliberately kept out the higher education and professions of the wider society (rather than their own much smaller institutions).

      • Mood_Indigo

        TrainedHistorian,

        I was considering a random sample of lower middle-class Indians and Vietnamese from urban and semi-rural areas in my thought experiment. It was not meant to refer to attributes of actual immigrants who have come to U.S. from these countries.

        My point is that in many cultures, academic achievement is held in high esteem and recognized as the most realizable means of economic mobility even among the poor who did not receive the benefits of this path of escaping poverty.

        I have read reports in the press in India on poor folks in cities spending as much as 30% of their meager family income to send their children to private elementary schools in the hope (often unrealized) that they will receive a good education because the public schools there are so lousy.

        Since you casually throw the “caste” word around in your comment, let me assure you that a significant fraction of poor members of all castes in India value education very highly. Education has been a key factor in poor Indians of all backgrounds moving up the economic ladder relative to their previous generation.

        You make the following statement that is essentially a straw man: “Lower income folks tend not to be willing or able to bear the long term cost of staying out of the workforce for more education”. My point is that poor parents in many cultures make financial sacrifices for their children’s economic mobility, not for their own career mobility. It’s a value issue.

        There is a significant population of Indian immigrants in the U.S. engaged in the service industry who are not professionals and have limited educational background. It may be worth taking a look at the economic mobility of their children.

        Related observation on downward mobility has shown that sections of the U.S. population in the middle-class that do not attach sufficient importance to their children’s education (school choice, taking advantage of other educational opportunities, etc.) show higher incidence of downward mobility. Unfortunately, I cannot quote the New York Times report I had read on this research (I think it was in the Freakonomics blog but I’m not sure).

        I was making a narrow point that you choose to dismiss as “overly simplistic”. Mixing it up with various sundry historical factors is not relevant.

        No snobbishness was intended in my comment on bowling (referring to Putnam’s book “Bowling Alone”). I personally like bowling.

        But I cannot help being amused at your condescension that as an immigrant I need to be educated about American history and the racial dynamics.

        • TrainedHistorian

          Your thought experiment is just that: NOT a random sample, therefore simplistic and speculative.Despite the supposed “value” on education you allude to even “poor” Indians in India having, India has one the worst upward mobility indexes, and an unconscionably high illiteracy rate, even compared to other “developing: countries( like the Philiipines or China), If education is so much more valued by Indians than say black or white Americans, why is Illiteracy so much higher there than in the US? Why are public schools so “lousy”, in your words, even lousier than here? Regarding poverty in India in general, sure, values play a role: negative attitudes towards low-castes and women doing non-traditional jobs/ being educated is partly behind such high illiteracy rates and low mobility, but a lot of poverty there is caused by the fact that India has had a very bad resource to labor ratio for quite a while. Fertility is still too high there relative to economic growth rates and to the countries they compete with.(BTW, high fertility is partly caused by “values” the negative attitudes towards females cf. the “missing girls” (aborted female fetuses) problem).. Such very high labor to resource ratios keep Indian wages for the poorest at rock bottom.

          Plenty of poor and middle-class people here too value education and spend extra money on it. But if you have a glutted labor market for most jobs,and retraining/higher education costs are high, you still aren’t going to have much upward mobility.. I got a PhD from a more prestigious university than my father, who has a PhD in the same field, but unlike him, I ended up downwardly mobile because the job market was glutted with PhDs, and the higher education to retrain, (and the interim housing one must pay for) is much more expensive relative to wages than when he was starting his career. So with a PhD, I had to take a series of part time jobs that paid quite poorly. Yet obviously I, like other PhDs who have had to take poorly-paid jobs, value education highly.

    • Robert Thomas

      Having been a working engineer myself for over thirty years, I observe that I’m easily able to find engineer coworkers ready to confidently explain myriad social phenomena and also provide corresponding prescriptive programs for their optimization after having made thoughtful use of the spare moments available to them between noon and teattime.

  • Nario

    Americans tend to not work together as a cohesive unit. We’ve ceased to be “joiners” as was said in the book Bowling Alone. Individualism is our greatest strength in terms of innovation and our greatest weakness as it means better organized groups divide us and pick off outliers.

    • jurgispilis

      like the Germans? Japanese? Chinese? Be specific.

    • Kurt thialfad

      Wait a minute! Diversity is our strength!

      • Denarius

        I’ve found that when small numbers of “diverse” individuals migrate to an area, this can be of great benefit as they are forced by circumstances to learn about the local culture. But when large groups suddenly move in, they have a tendency to resist assimilation because they want and are able to reestablish their foreign culture (including any corrupt practices), sometimes with a harsh view of locals’ culture.

  • Pete

    Born on 5th Ave, educated in Boston, yet Ideas & running –
    locomotion – lead to fertile SF Bay area. What LUCK! Paradise found.

  • Robert Thomas

    honestly, how are we supposed to take the “science” of economics seriously?

    I just heard Harvard economist and MacArthur Fellow Raj Chetty (a contributor to “The New Geography…”) present the conclusions of this report on the News Hour (7/24). Puzzlingly, he emphasized the report’s result that public expenditure on local education was (rather than was not) a principle positive indicator for economic mobility.

    On the other hand, consider the source (the entire discipline if not a particular individual): an article by Caren Chesler appearing in the October 2007 edition of the American Enterprise Institute’s on-line publication _The American_ entitled “The Experimentalist” lauds the profound ideas Chetty has contributed::

    “In a study entitled ‘Consumption Commitments and Risk Preferences,’ published this year in The Quarterly Journal of Economics, [Raj] Chetty and Berkeley colleague Adam Szeidl contest the popular belief among economists that unemployment insurance is too generous. George Akerlof, who also teaches at Berkeley and won the Nobel Prize for Economics in 2001, describes Chetty’s insight in the study as revolutionary. ‘He had a new way of looking at the problems of the unemployed,’ Akerlof says. ‘Raj emphasized that they find it very difficult to meet their prior commitments. For example, they must pay their rent or their mortgage, and these commitments very much add to the difficulties of being unemployed. Economists were just not thinking of that until Raj came up with it. This is a very big innovation in the theory of unemployment.'”

    http://www.american.com/archive/2007/september-october-magazine-contents/the-experimenter

    Poor people find it difficult to pay rent or mortgage?? Let us explore this further! Nobel, are you listening?

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