Should-Read: Raj Chetty et al.: Trends in US absolute income mobility since 1940

Should-Read: Raj Chetty et al.: Trends in US absolute income mobility since 1940: “Under the current distribution… we would need real GDP growth rates above 6% per year to return… http://voxeu.org/article/trends-us-absolute-income-mobility-1940

…to rates of absolute mobility in the 1940s…. Because a large fraction of GDP goes to a small fraction of high-income households today, higher GDP growth does not substantially increase the number of children who earn more than their parents…. [But] changing the distribution of growth naturally has smaller effects on absolute mobility when there is very little growth to be distributed. The key point is that increasing absolute mobility substantially would require more broad-based economic growth…. Absolute mobility has declined sharply in the US over the past half century primarily because of the growth in inequality. If one wants to revive the American Dream of high rates of absolute mobility, one must have an interest in growth that is shared more broadly across the income distribution…