New research co-funded by the Russell Sage Foundation and the Pew Charitable Trusts contains sobering new evidence on the lack of social mobility in the United States. In their report, authors David Grusky and Pablo Mitnik (Stanford University) note that approximately half of parental income advantages in the United States are passed on to children, which is among the lowest estimates of economic mobility yet produced.

The study, "Economic Mobility in the United States," provides the most comprehensive assessment to date of the intergenerational transmission of economic advantage. The report draws on a new data set from tax returns and other administrative sources to overcome limitations that hampered previous studies. These findings make clear that children raised in families that are far apart on the income ladder can expect markedly different economic futures. As Joe Pinsker writes about the report in the Atlantic, “This means that the amount of money one makes can be roughly predicted by how much money one’s parents made, and that only gets truer as one moves along the earnings spectrum.”

RSF president Sheldon Danziger stated, “The report documents that public policies must do more to level the playing field so that children from low-income families have greater opportunities to compete in the 21st century economy. Over recent decades, the rising income and wealth of affluent parents have allowed them to increase investments in their children, from day care through college. At the same time, wages have stagnated for most workers and low-income families have struggled to pay for routine expenses.”

This report utilizes the intergenerational elasticity (IGE) to measure the share of economic advantage that is passed on to children. The IGE is typically between zero and one, with an IGE of zero implying that children from families of different socioeconomic status have the same expected income as one another, with no inherited income advantage or disadvantage. An IGE of one, on the other hand, implies that parental advantages are fully passed on.

Key findings in the report:

• Approximately half of parental income advantages are passed on to children.
  The IGE, when averaged across all levels of parental income, is estimated at 0.52 for men and 0.47 for women. These estimates are at the high end of previous estimates and imply that the United States is very immobile.
• Children born far apart in the income distribution have very different economic outcomes.
  The expected family income of children raised at the 90th income percentile is about three times that of children raised at the 10th percentile.
• Parental income matters more for men’s earnings than for women’s.
  Although both men and women benefit from being born into higher-income families, men benefit much more, at least in terms of their own earnings.
• The persistence of advantage is especially large among those raised in the middle to upper reaches of the income distribution.
  The IGE among adults whose parents were between the 50th and 90th income percentiles is 0.68 for men and 0.63 for women. This means that approximately two-thirds of parental income differences within this region of the income distribution persist into the next generation.

Click here to read the report in full.