IDEAS home Printed from https://ideas.repec.org/p/cen/wpaper/24-38.html
   My bibliography  Save this paper

Changing Opportunity: Sociological Mechanisms Underlying Growing Class Gaps and Shrinking Race Gaps in Economic Mobility

Author

Listed:
  • Raj Chetty
  • Will Dobbie
  • Benjamin Goldman
  • Sonya R. Porter
  • Crystal S. Yang

Abstract

We show that intergenerational mobility changed rapidly by race and class in recent decades and use these trends to study the causal mechanisms underlying changes in economic mobility. For white children in the U.S. born between 1978 and 1992, earnings increased for children from high-income families but decreased for children from low-income families, increasing earnings gaps by parental income (�class�) by 30%. Earnings increased for Black children at all parental income levels, reducing white- Black earnings gaps for children from low-income families by 30%. Class gaps grew and race gaps shrank similarly for non-monetary outcomes such as educational attainment, standardized test scores, and mortality rates. Using a quasi-experimental design, we show that the divergent trends in economic mobility were caused by differential changes in childhood environments, as proxied by parental employment rates, within local communities defined by race, class, and childhood county. Outcomes improve across birth cohorts for children who grow up in communities with increasing parental employment rates, with larger effects for children who move to such communities at younger ages. Children�s outcomes are most strongly related to the parental employment rates of peers they are more likely to interact with, such as those in their own birth cohort, suggesting that the relationship between children�s outcomes and parental employment rates is mediated by social interaction. Our findings imply that community-level changes in one generation can propagate to the next generation and thereby generate rapid changes in economic mobility.

Suggested Citation

  • Raj Chetty & Will Dobbie & Benjamin Goldman & Sonya R. Porter & Crystal S. Yang, 2024. "Changing Opportunity: Sociological Mechanisms Underlying Growing Class Gaps and Shrinking Race Gaps in Economic Mobility," Working Papers 24-38, Center for Economic Studies, U.S. Census Bureau.
  • Handle: RePEc:cen:wpaper:24-38
    as

    Download full text from publisher

    File URL: https://www2.census.gov/library/working-papers/2024/adrm/ces/CES-WP-24-38.pdf
    File Function: First version, 2024
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Raj Chetty & Matthew O. Jackson & Theresa Kuchler & Johannes Stroebel & Nathaniel Hendren & Robert B. Fluegge & Sara Gong & Federico Gonzalez & Armelle Grondin & Matthew Jacob & Drew Johnston & Martin, 2022. "Social capital I: measurement and associations with economic mobility," Nature, Nature, vol. 608(7921), pages 108-121, August.
    2. Lawrence F. Katz & Jonathan Roth & Richard Hendra & Kelsey Schaberg, 2022. "Why Do Sectoral Employment Programs Work? Lessons from WorkAdvance," Journal of Labor Economics, University of Chicago Press, vol. 40(S1), pages 249-291.
    3. Zachary Ward, 2023. "Intergenerational Mobility in American History: Accounting for Race and Measurement Error," American Economic Review, American Economic Association, vol. 113(12), pages 3213-3248, December.
    4. Cutler, David M. & Lange, Fabian & Meara, Ellen & Richards-Shubik, Seth & Ruhm, Christopher J., 2011. "Rising educational gradients in mortality: The role of behavioral risk factors," Journal of Health Economics, Elsevier, vol. 30(6), pages 1174-1187.
    5. David Card & Alan B. Krueger, 1992. "School Quality and Black-White Relative Earnings: A Direct Assessment," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 107(1), pages 151-200.
    6. Eric Chyn & Lawrence F. Katz, 2021. "Neighborhoods Matter: Assessing the Evidence for Place Effects," Journal of Economic Perspectives, American Economic Association, vol. 35(4), pages 197-222, Fall.
    7. Simon Luechinger & Stephan Meier & Alois Stutzer, 2010. "Why Does Unemployment Hurt the Employed?: Evidence from the Life Satisfaction Gap Between the Public and the Private Sector," Journal of Human Resources, University of Wisconsin Press, vol. 45(4), pages 998-1045.
    8. Dynarski, Mark, 1987. "The Scholastic Aptitude Test: Participation and performance," Economics of Education Review, Elsevier, vol. 6(3), pages 263-273, June.
    9. Raj Chetty & Nathaniel Hendren & Patrick Kline & Emmanuel Saez & Nicholas Turner, 2014. "Is the United States Still a Land of Opportunity? Recent Trends in Intergenerational Mobility," American Economic Review, American Economic Association, vol. 104(5), pages 141-147, May.
    10. Ariel J. Binder & John Bound, 2019. "The Declining Labor Market Prospects of Less-Educated Men," Journal of Economic Perspectives, American Economic Association, vol. 33(2), pages 163-190, Spring.
    11. Patrick Bayer & Kerwin Kofi Charles, 2018. "Divergent Paths: A New Perspective on Earnings Differences Between Black and White Men Since 1940," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 133(3), pages 1459-1501.
    12. David Autor & David Dorn & Gordon Hanson, 2019. "When Work Disappears: Manufacturing Decline and the Falling Marriage Market Value of Young Men," American Economic Review: Insights, American Economic Association, vol. 1(2), pages 161-178, September.
    13. Paul Novosad & Charlie Rafkin & Sam Asher, 2022. "Mortality Change among Less Educated Americans," American Economic Journal: Applied Economics, American Economic Association, vol. 14(4), pages 1-34, October.
    14. McNeil, Andrew & Luca, Davide & Lee, Neil, 2023. "The long shadow of local decline: Birthplace economic adversity and long-term individual outcomes in the UK," Journal of Urban Economics, Elsevier, vol. 136(C).
    15. Carolyn A. Liebler & Sonya R. Porter & Leticia E. Fernandez & James M. Noon & Sharon R. Ennis, 2017. "America’s Churning Races: Race and Ethnicity Response Changes Between Census 2000 and the 2010 Census," Demography, Springer;Population Association of America (PAA), vol. 54(1), pages 259-284, February.
    16. Ellora Derenoncourt, 2022. "Can You Move to Opportunity? Evidence from the Great Migration," American Economic Review, American Economic Association, vol. 112(2), pages 369-408, February.
    17. Raj Chetty & David J. Deming & John N. Friedman, 2023. "Diversifying Society’s Leaders? The Determinants and Causal Effects of Admission to Highly Selective Private Colleges," NBER Working Papers 31492, National Bureau of Economic Research, Inc.
    18. William A. Darity & Arthur H. Goldsmith, 1996. "Social Psychology, Unemployment and Macroeconomics," Journal of Economic Perspectives, American Economic Association, vol. 10(1), pages 121-140, Winter.
    19. Ben Sprung-Keyser & Sonya Porter, 2023. "The Economic Geography of Lifecycle Human Capital Accumulation: The Competing Effects of Labor Markets and Childhood Environments," Working Papers 23-54, Center for Economic Studies, U.S. Census Bureau.
    20. Michael J. Weiss & Alyssa Ratledge & Colleen Sommo & Himani Gupta, 2019. "Supporting Community College Students from Start to Degree Completion: Long-Term Evidence from a Randomized Trial of CUNY's ASAP," American Economic Journal: Applied Economics, American Economic Association, vol. 11(3), pages 253-297, July.
    21. C. Kirabo Jackson & Claire L. Mackevicius, 2024. "What Impacts Can We Expect from School Spending Policy? Evidence from Evaluations in the United States," American Economic Journal: Applied Economics, American Economic Association, vol. 16(1), pages 412-446, January.
    22. Nathan Deutscher, 2020. "Place, Peers, and the Teenage Years: Long-Run Neighborhood Effects in Australia," American Economic Journal: Applied Economics, American Economic Association, vol. 12(2), pages 220-249, April.
    23. Raj Chetty & Nathaniel Hendren & Lawrence F. Katz, 2016. "The Effects of Exposure to Better Neighborhoods on Children: New Evidence from the Moving to Opportunity Experiment," American Economic Review, American Economic Association, vol. 106(4), pages 855-902, April.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Raze, Kyle & Waddell, Glen R., 2024. "Does the salience of race mitigate gaps in disciplinary outcomes? Evidence from school fights," Economics of Education Review, Elsevier, vol. 102(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Sezer, Ayse Hazal, 2024. "Historical and contemporary perspectives on labor," Other publications TiSEM 88c702e1-8259-4424-b68a-d, Tilburg University, School of Economics and Management.
    2. Cavit Baran & Eric Chyn & Bryan A. Stuart, 2024. "The Great Migration and Educational Opportunity," American Economic Journal: Applied Economics, American Economic Association, vol. 16(3), pages 354-398, July.
    3. Claudia Goldin & Lawrence F. Katz, 2024. "The Incubator of Human Capital: The NBER and the Rise of the Human Capital Paradigm," NBER Chapters, in: The Economic History of American Inequality: New Evidence and Perspectives, National Bureau of Economic Research, Inc.
    4. Kiessling, Lukas, 2021. "How do parents perceive the returns to parenting styles and neighborhoods?," European Economic Review, Elsevier, vol. 139(C).
    5. Sofoklis Goulas & Silvia Griselda & Rigissa Megalokonomou & Yves Zenou, 2024. "Disruptive Peers and Academic Performance: Short- and Long-Term Outcomes," Monash Economics Working Papers 2024-21, Monash University, Department of Economics.
    6. De Giorgi, Giacomo & Gambetti, Luca & Naguib, Costanza, 2020. "Life-Cycle Inequality: Blacks And Whites Differentials In Life Expectancy, Savings, Income, And Consumption," CEPR Discussion Papers 15182, C.E.P.R. Discussion Papers.
    7. Muñoz, Ercio, 2021. "Does it Matter Where You Grow up? Childhood Exposure Effects in Latin America and the Caribbean," Research Department working papers 1843, CAF Development Bank Of Latinamerica.
    8. Hanushek, Eric A. & Jacobs, Babs & Schwerdt, Guido & Van der Velden, Rolf & Vermeulen, Stan & Wiederhold, Simon, 2021. "The Intergenerational Transmission of Cognitive Skills: An Investigation of the Causal Impact of Families on Student Outcomes," IZA Discussion Papers 14854, Institute of Labor Economics (IZA).
    9. Sofoklis Goulas & Silvia Griselda & Rigissa Megalokonomou & Yves Zenou, 2024. "Disruptive Peers and Academic Performance: Short- and Long-Term Outcomes," CESifo Working Paper Series 11568, CESifo.
    10. Datar, Ashlesha & Nicosia, Nancy & Samek, Anya, 2023. "Heterogeneity in place effects on health: The case of time preferences and adolescent obesity," Economics & Human Biology, Elsevier, vol. 49(C).
    11. Ashlesha Datar & Nancy Nicosia & Anya Samek, 2022. "Heterogeneity in Place Effects on Health: The Case of Time Preferences and Adolescent Obesity," NBER Working Papers 29935, National Bureau of Economic Research, Inc.
    12. Eric Chyn & Lawrence F. Katz, 2021. "Neighborhoods Matter: Assessing the Evidence for Place Effects," Journal of Economic Perspectives, American Economic Association, vol. 35(4), pages 197-222, Fall.
    13. Ariel J. Binder & Caroline Walker & Jonathan Eggleston & Marta Murray-Close, 2022. "Race and Mobility in U.S. Marriage Markets: Quantifying the Role of Segregation," Working Papers 22-59, Center for Economic Studies, U.S. Census Bureau.
    14. Chapelle, Guillaume & Domènech Arumí, Gerard & Gobbi, Paula Eugenia, 2023. "Housing, Neighborhoods and Inequality," CEPR Discussion Papers 17969, C.E.P.R. Discussion Papers.
    15. Sandher, Jeevun, 2022. "Familiar Faces, Worn Out Places: The Effect of Personal and Place Prosperity On Well-Being," SocArXiv am6gq, Center for Open Science.
    16. Lars J. Lefgren & Jaren C. Pope & David P. Sims, 2022. "Contemporary State Policies and Intergenerational Income Mobility," Journal of Human Resources, University of Wisconsin Press, vol. 57(4), pages 1107-1146.
    17. Deepak Saraswat, 2022. "Labor Market Impacts of Exposure to Affordable Housing Supply: Evidence from the Low-Income Housing Tax Credit Program," Working papers 2022-09, University of Connecticut, Department of Economics.
    18. Martti Kaila & Emily Nix & Krista Riukula, 2021. "Disparate Impacts of Job Loss by Parental Income and Implications for Intergenerational Mobility," Opportunity and Inclusive Growth Institute Working Papers 53, Federal Reserve Bank of Minneapolis.
    19. Card, David & Rothstein, Jesse, 2007. "Racial segregation and the black-white test score gap," Journal of Public Economics, Elsevier, vol. 91(11-12), pages 2158-2184, December.
    20. Barbara Broadway & Anna Zhu, 2023. "Spatial heterogeneity in welfare reform success," Melbourne Institute Working Paper Series wp2023n13, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.

    More about this item

    JEL classification:

    • H0 - Public Economics - - General
    • J0 - Labor and Demographic Economics - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cen:wpaper:24-38. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Dawn Anderson (email available below). General contact details of provider: https://edirc.repec.org/data/cesgvus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.