Where a kid grows up — as specific as the streets they play on and as broad as the country their emigrating parents choose — can set the course for upward mobility the rest of their life, beyond what just “a little hard work” can create.
That means, says research economist Raj Chetty, that the so-called American Dream, earning more than and enjoying greater opportunities than one’s parents, isn’t so American any more, at least without a degree of intervention.
Chetty, a Harvard professor, was talking to Vox’s Ezra Klein:
‘If you were an immigrant choosing where to go and have the best chances of climbing the income ladder, then statistically you’d have a better shot of achieving ‘the American dream’ if you’re growing up in Canada or in many Scandinavian countries than the United States.’
“That’s just a fact,” the economist added. “If you’re in a lower-middle-income family, you’re more likely to climb the income ladder in those countries,” which, among other differences, offer variations of universal health care and treat early-childhood education differently.
He went on: “[T]he U.S. has a lot more variation across places than other countries do. In Sweden, it matters much less which specific neighborhood you grow up in; in the U.S., it matters a ton. There are parts of the U.S. that have even higher rates of upward mobility than Sweden on average, but there are also parts of the U.S. that look much, much worse than any country for which we currently have data. So the U.S. has this incredibly varied mix where there’s some places that are truly lands of opportunity and other places that are lands of persistent poverty.”
Chetty, whose family made the move from India to the U.S. during his childhood, briefly addressed the notion that newer entrants to the U.S. change the course of prosperity for native-born citizens.
“The best evidence that we have on the impacts of immigration on natives from scholars like David Card and others is that those effects aren’t all that significant,” he said. “In some studies they actually look somewhat positive. High-skilled immigrants in particular increase productivity and lead to more innovation. So from a social-welfare point of view, there’s certainly something to be said for having high rates of immigration and allowing people to flow across borders.”
The lengthy Vox interview with the 40-year-old Chetty, who is considered by some peers “the most influential economist alive today” and a Nobel Prize front runner, touched on race as well as geography.
By Chetty’s measure, perhaps the best study of upward mobility has little to do with borders; it’s at the street level.
The neighborhood where kids grow up has a profound effect on their chances for upward mobility. Chetty detailed his project on the subject, called Creating Moves to Opportunity, which used Seattle and King County as its lab for their real-world experiment.
Chetty and fellow researchers came to the data asking why working-age people are remaining in underdeveloped, high-poverty neighborhoods. Is it because they have other reasons for wanting to live there, like family who live close by or a nearby job? Or are there barriers that are making it hard for low-income families to move to higher-opportunity neighborhoods, such as lacking information, little or no support in the housing search process, or landlords who don’t want to rent housing to them?
For example, even families given a $1,500 monthly housing voucher in Seattle still often end up living in a high-poverty, low-opportunity neighborhood.
Chetty and team added to the government voucher a counselor who helped find units that might work for families in high-opportunity areas and helped contact landlords in order to identify suitable units. Plus the researchers provided another $1,000 boost per family to pay deposits or initial bills.
“What we found was a remarkable change in terms of where families ended up choosing to move. Of the families that did not receive these services, only something like 18% moved to high-opportunity neighborhoods. In contrast, in the treatment group, that number jumps to 55% or 60%. So the majority of [CMO program] families are moving to these more mixed-income, higher-opportunity areas,” he told Vox’s Klein.
The money helped, no doubt, but the economist found that much of the impetus to move on up, so to speak, could be tied to having a counselor every step of the way, and because landlords were more responsive to the counselors than residents trying to rent on their own.
In other words, solo navigation of the land of opportunity can leave people stuck.