Economic Mobility of Families Across Generations

  • November 13, 2007
  • By Julia B. Isaacs

"Doing better” than one's parents has long been a key element of the American Dream. Not only can people earn more, but they can move up the ladder compared to others. The story, embedded in our history and our literature, suggests any person can start from humble beginnings and achieve great wealth, or at least reach the middle class. But how are Americans doing today? Are they better off than their own parents were and how much does their eventual success depend on their family background?

The report takes a comprehensive view of economic mobility, asking questions about both absolute and relative mobility. The first key question is, “To what extent do American families improve their incomes over a generation?” Each generation should have higher income than the last, assuming economic growth, so the issue here is the amount of growth and how it is distributed across society. A less frequently asked question is “How often do individual Americans end up with higher family incomes than their own parents, either because economic growth has boosted their income or because that individual has moved up or down the economic ladder?” A third question ignores the overall increases due to economic growth and focuses exclusively on relative mobility: “To what extent does where one ends up in the income distribution depend on where one began?” Put differently, are the economic fortunes of children tied to that of their parents or is there a lot of movement up and down the economic ladder from one generation to the next?

To answer these questions, the report's author, Julia B. Isaacs of The Brookings Institution, uses a widely respected national data source that enables direct matching of family income of parents in the late 1960s to their children's family income in the late 1990s to early 2000s. The report concludes with a four-part mobility typology, developed in collaboration with John E. Morton and Ianna Kachoris of Pew's Economic Mobility Project.