Rethinking U.S. economic mobility to study change within a generation

Overview

When most people think about intergenerational mobility, they often assume it unfolds gradually over long periods of time. Historical patterns have reinforced this perception, shaping a widespread belief that meaningful economic mobility is tied to the passage of time.

Yet in today’s political and social climate, concerns about the prospects for economic mobility are mounting as inequality continues to widen. The United States now ranks among the lowest in economic mobility compared to other advanced economies. With ongoing federal cuts to essential social programs such as Medicaid and the Supplemental Nutrition Assistance Program, questions persist about who is truly positioned to thrive in today’s U.S. economy.

These realities make it increasingly urgent to pursue research that investigates the conditions enabling mobility over shorter periods of time to create more effective policies. By shifting the lens from long-term structural legacies to more immediate, community-level dynamics, research on economic opportunity can identify how to encourage economic mobility within generations as well.

A recent working paper, “Changing Opportunity: Sociological Mechanisms Underlying Growing Class Gaps and Shrinking Race Gaps in Economic Mobility,” studies this potential shift in perspective. The researchers from Opportunity Insights who co-authored the paper—Raj Chetty, Will Dobbie, Benjamin Goldman, Sonya R. Porter, and Crystal S. Yan—aim to understand the causal mechanisms behind rapid changes in intergenerational economic mobility.

As it turns out, the authors find that changes in community conditions, such as employment rates within racial and economic parental peer groups, have a causal effect on children’s long-term economic outcomes. In other words, where and with whom parents and children live and interact shapes the trajectory of the next generation.

The co-authors observed a stark divergence in intergenerational economic mobility across race and class between those born in 1978 and those born in 1992. Specifically, the gap in economic mobility between low-income Black and White families narrowed, while the gap between White children from low- and high-income families widened. These trends—a shrinking race gap and a growing class gap—were seen not just in earnings, but also in other life outcomes, including marriage, mortality, and incarceration rates.

Still, the study finds that Black children from low-income families continue to face significantly lower levels of upward mobility—highlighting just how deep racial economic inequality is and remains. The research by the Opportunity Insights co-authors suggests that while racial disparities are shrinking among low-income groups, class remains a powerful barrier to mobility. Notably, income gaps among children from high-income Black and White families remained relatively unchanged, pointing to the limits of progress at the top of the income distribution.

The role of community in mobility

Chetty and his co-authors examined various potential explanations for these diverging trends, including neighborhood- and family-level factors. They find that community-level changes, especially in the social environments to which children are exposed, contribute the most to the observed differences.

This indicates that growing up in a community with higher parental employment increases a child’s chances of upward mobility. As such, it seems children are more influenced by the employment status of other parents in their own peer group, characterized by similar racial, class, and geographic backgrounds.

Yet the paper also finds that the impact of parental employment rates on children’s outcomes varies depending on the social environment in which they grow up. In other words, it is not just how wealthy a community is that matters, but with whom children and their families interact as well. Social networks and daily interactions within a community thus play a larger role in shaping a child’s future than material resources alone.

These social dynamics help explain why moving to a community with rising parental employment rates, especially at a young age, can significantly improve long-term outcomes, highlighting the powerful role of social context in driving intergenerational mobility.

Conclusion

These findings are critical for policymakers to address both racial and class-based economic inequality. Debates earlier this year around the One Big Beautiful Bill Act highlight how broad federal policy decisions can deeply influence the local environments that shape children’s outcomes. Increases in health care costs for Medicare recipients, cuts to nutrition assistance programs, and the redirection of public school funding collectively threaten the stability and opportunity structures within low-income communities.

Given the evidence that neighborhood social environments play a critical role in shaping children’s life outcomes, it is imperative that policy shifts toward more targeted interventions—ones that strengthen communities rather than erode them. Structured-focus policies that invest in community-level change, particularly those that build opportunity-rich environments for low-income families, may be critical in addressing both racial and class-based economic inequality. In doing so, these policies can pave the way for greater opportunity and equitable prosperity for countless individuals in the generations to come.

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