David Leonhardt reports the findings of an ambitious new study of upward mobility across U.S. metropolitan regions. The results resonate with my ideological priors, and so I’ll be very interested to see how they’ll be interpreted in the weeks and months to come.
The team, led by Raj Chetty and Nathaniel Hendren of Harvard and Patrick Klein and Emmanuel Saez of UC Berkeley, sought to assess the impact of tax policy across regions. They began by analyzing earnings data with an eye towards assessing the impact of tax policy on intergenerational mobility. They found that the level of upward mobility for children raised in households in the bottom fifth of the income distribution varies considerably across regions, and there is even wide variation among regions with similar average incomes.
Yet while Chetty et al. found that larger tax credits for poor households and higher taxes on affluent households have a somewhat beneficial impact on upward mobility:
The researchers concluded that larger tax credits for the poor and higher taxes on the affluent seemed to improve income mobility only slightly. The economists also found only modest or no correlation between mobility and the number of local colleges and their tuition rates or between mobility and the amount of extreme wealth in a region.
… they identified several other factors that appeared to matter a great deal: (1) regions in which most poor families live in neighborhoods with high poverty concentrations have lower upward mobility levels than regions in which poor families live in mixed-income neighborhoods; (2) upward mobility for the poor is higher in regions with higher concentrations of two-parent families, better schools, and higher levels of civic engagement; and (3) regions with relatively high black populations tend to have less upward mobility for the poor than regions with relatively low black populations, though upward mobility tends to be lower for whites as well as blacks in these regions.
And so, Leonhardt observes, some U.S. regions, like the Pittsburgh (2.4 million), Seattle (3.5 million), and Salt Lake City (969,000) metropolitan areas, have levels of upward mobility for the poor comparable to those that obtain in countries like Denmark (5.6 million) and Norway (4.9 million), while the Atlanta (5.5 million) and Memphis (1.3 million) metropolitan areas have levels of upward mobility that would be among the lowest among affluent countries.
Leonhardt emphasizes the role of economic geography, and with good reason. In regions like Atlanta, low-wage workers tend to be more isolated from employment opportunities than low-wage workers in regions like San Francisco and New York, which are denser and relatively well-served by transit. This is why I often emphasize the role of increasing density in mitigating poverty. U.S. conservatives tend to be skeptical of efforts to increase density and the mode share of transit. But it is important to keep in mind that these efforts aren’t just complements to direct redistribution. Rather, they might serve as substitutes for it. That is, a denser region well-served by transit might require less in the way of direct redistribution, as poor families will have better access to employment opportunities, which will in turn reduce the demand for direct redistribution. The problem, of course, is that incumbents residing in dense regions tend to resist new development, and so dense, high-productivity regions tend to have high housing costs, which in turn drive many low-income families to low-density, low-productivity regions.
One of the questions raised by the work of Chetty et al. is why many Americans, particularly African Americans, are moving from regions with relatively high levels of upward mobility from the bottom of the income distribution to regions with relatively low levels of upward mobility from the bottom of the income distribution. Chenoa Flippen, a sociologist at the University of Pennsylvania, published a paper in the American Journal of Sociology earlier this year that might shed light on this phenomenon. Flippen observes that while the net migration rate for whites in the Northeast was -22.2 per thousand from 1995 to 2000, it was -41.6 per thousand for blacks. The pattern was even more pronounced in the West, where the net migration rate was 6.7 per thousand for whites and -18.7 per thousand for blacks. In the South, in contrast, the net migration rates were similar: 19 per thousand for whites and 21 per thousand for blacks. Flippen argues that blacks are moving to the South to improve their relative status:
While the link between geographic and social mobility has long been a cornerstone of sociological approaches to migration, recent research has cast doubt on the economic returns to internal U.S. migration. Moreover, there are important racial disparities in prevailing population movements, with blacks significantly more likely than whites to engage in southern migration, that remain poorly understood. This paper, which draws on data from the 2000 census, reappraises the link between migration and social mobility by taking relative deprivation into consideration. We examine the association between migration, disaggregated according to region of origin and destination, and absolute and relative measures of earnings and occupational prestige, separately by race. Our findings lend new insight into the theoretical and stratification implications of growing racial disparities in southern migration patterns; we show that while both blacks and whites who move from north to south generally average lower absolute incomes than their sedentary northern peers, they enjoy significantly higher relative social position. Moreover, the relative “gains” to migration are substantially larger for blacks than for whites. The opposite patterns obtain for south-north migration.
That is, black families might be moving to low-productivity, low-density regions in part to improve their relative status, even if their absolute incomes decline. And as Flippen explains, improving relative status is a less urgent consideration for whites residing in the Northeast:
While racial inequality has fallen substantially since the Civil Rights Movement, blacks in the North nevertheless compete for relative social position with increasingly prosperous whites. Moving south holds the potential to substantially raise relative social position both because blacks start from a relatively low position in the overall status hierarchy, and because the earnings distribution in the South houses more lower income individuals. Whites, on the other hand, are already relatively high status in the North. While they stand to gain from moving to a less prosperous area, they have less room to improve than blacks, on average. Thus even in the absence of positive absolute monetary or occupational gains, the combination of racial inequality and regional variation in social structures translate into greater potential improvements in relative position for blacks than whites stemming from north-south moves.
Flippen’s analysis raises a number of intriguing possibilities. Measures designed to make housing more affordable in dense, high-productivity regions, like relaxing local land use regulations, etc., might facilitate integration, which might in turn facilitate upward mobility. Yet measures that tend to increase wage and wealth dispersion, like a sharp increase in less-skilled immigration (which increases incomes for the highest-earners, who are in a better position to outsource household tasks, while potentially putting pressure on the lowest-earners competing for positional goods), might have more of an impact on blacks than whites.
My takeaway from Leonhardt’s article and the work of Chetty et al. is, predictably enough, that density, transit access, and marriage and social capital matter far more than is commonly understood. I would also add that effective crime control is an effective policy lever for reducing the concentration of poverty and improving cognitive outcomes among poor children. Taken together, we have a rough sketch of what a new anti-poverty policy agenda ought to keep in mind.