Marginal Revolution
By mobility I mean whether people are crossing into different income quintiles or deciles than the ones they were born into, or the ones they enjoyed at an earlier period of life.
1. If the general standard of living is rising (and I am more than willing to admit problems in this area for the United States), mobility takes care of itself over time. I find it more useful to focus on slow growth, if indeed that is the case. Just look at income growth for non-wealthy families and that is more useful than all the mobility measures put together.
2. Measured mobility in the United States does not seem to be falling, or at least not falling much, as shown by Scott Winship.
3. For a given level of income, if some are moving up others are moving down. Do you take theories of wage rigidity seriously? If so, you might favor less relative mobility, other things remaining equal. More upward — and thus downward — relative mobility probably means less aggregate happiness, due to habit formation and frame of reference effects.
4. Why do many European nations have higher mobility? Putting ethnic and demographic issues aside, here is one mechanism. Lots of smart Europeans decide to be not so ambitious, to enjoy their public goods, to work for the government, to avoid high marginal tax rates, to travel a lot, and so on. That approach makes more sense in a lot of Europe than here. Some of the children of those families have comparable smarts but higher ambition and so they rise quite a bit in income relative to their peers. (The opposite may occur as well, with the children choosing more leisure.) That is a less likely scenario for the United States, where smart people realize this is a country geared toward higher earners and so fewer smart parents play the “tend the garden” strategy. Maybe the U.S. doesn’t have a “first best” set-up in this regard, but the comparison between U.S. and Europe is less sinister than it seems at first. “High intergenerational mobility” is sometimes a synonym for “lots of parental underachievers.”
5. How much of immobility is due to “inherited talent plus diminishing role for random circumstance”? Is not this cause of immobility very different — both practically and morally — from such factors as discrimination, bad schools, occupational licensing, etc.? What are you supposed to get when you combine genetics with meritocracy? I do not know how much of current American (or other) immobility is due to this factor, but I find it discomforting that complaints about mobility are so infrequently accompanied by an analysis of this topic.
6. I am more than willing to hear arguments than a less mobile society is a less stable society, or otherwise a society which makes worse political decisions. But I haven’t seen serious arguments here. By “serious arguments” I mean those which take endogeneity into account and go beyond noting that Denmark is a better polity than Brazil, and so on.
7. I would like all measurements in this area to take into account the pre-migration incomes of incoming entrants. Denmark, which doesn’t let many people in, is a much less upwardly mobile society once you take this into account. Sweden deserves more praise, and in general this factor will make the Anglo countries look much, much more supportive of mobility.
Addendum: Here is more from Scott Winship.
155 comments
“…the United States, where smart people realize this is a country geared toward higher earners…”: would you care to elaborate?
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He does, every day – it is just that sometimes, someone looking from the outside in may not realize it.
Americans simply value the illusion of getting wealthy over the reality of having what wealth is supposed to bring – security for one’s family (like that which universal health insurance provides, for one concrete example, in Europe), leisure time, the ability to travel, security in one’s job (firing at will is not really allowed in Europe, very broadly speaking).
But truly high earners in America (and even that might be considered a misnomer – a certain current Republican candidate for president didn’t ‘earn’ money at a PE company, since that would have been taxed at twice the rate of 15% he actually paid, for example) don’t care – and having spent some of their income in ensuring a continuing stream of effective propaganda, have ensured that the American system continues to be bent increasingly to their advantage.
What is so laughable about this is that high earning Europeans tend to value exactly the same things – leisure time, health care, job security – as low earning ones. That one would think that there is somehow a difference in such desires simply due to how much money one earns is an interesting comment on how skewed America has become.
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Right. The Greeks decided they really like chaos. They could just stimulate and keep extending the promises but they are just bored with the good life.
And we could just extend free healthcare to everybody, despite the fact that the only real reason, and even the self-contradictory suspension of disbelief justifications given (remember, we need to fix healthcare to fix the economy) is the increasing perception (some might say recognition) that we can’t even keep doing as much as we have been.
And talking about Mitt Romney is the same as talking about anyone who earns over $250k/yr.
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prior-approval. Agreed. We just have better opium to feed the masses. The persons arguing the contrary should look up the gini coefficients for the US and other countries over time.
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It doesn’t prove anything. Other countries work hard to remove inequality. They don’t always increase their GDP per capita in the process.
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What are those countries. Please provide the data on GDP change and change on income inequality to support your statement.
You can’t.
North Korea, historically the USSR, etc.
The Great Leap Forward is generally accepted to have done both.
Now you are talking about changes?
Google “gini coefficients by year” and look at images.
Check out China and Brazil.
I’m not sure what you are asking for.
Andrew, I did yesterday and that was my source of comments. Also, look at the US.
Gini coefficients are a poor measure of nominal well being.
If Bill Gates moved his family and his assets to Icelands and became Icelandic, Icelands gini coefficient would immediately become the worst in the OECD and the US would become marginally better.
Is it your opinion that this would be a Bad thing for Iceland and a Good thing for the US?
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So, you’re argument against gini coefficients is based on one wealthty person moving to a low population island?
What’s your argument for a high population country?
Well, you are leaving out all the things Americans have and Europeans don’t, like appliances and technology, houses, land, children.
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