Author Topic: NBER report: The American dream is dead  (Read 257 times)

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NBER report: The American dream is dead
« on: February 01, 2014, 07:47:26 AM »
NBER Report: The American Dream Is Dead

Friday, 31 Jan 2014 07:26 AM

By Kristin Caliendo

The place in which you live may be killing the American Dream, according to a new study by the National Bureau of Economic Research, suggesting that America may not be the land of opportunity.

 Inequality is inhibiting the opportunity for upward mobility in the United States particularly in communities in the South.

 On average, a 10 percentile increase in parent income is associated with a 3.4 percentile increase in a child's income

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 However, the probability that a child reaches the top 20 percent of the national income distribution from a family in the bottom 20 percent varies from 4.4 percent in Charlotte, N.C., to 12.9 percent in San Jose, Calif.

 The researchers found that the mobility gap cannot be attributed to local tax and spending decisions, local school quality or local area colleges and tuition. Labor markets also didn't matter.

Instead, the mobility gap is influenced on five pertinent factors:

1. Race. Less upward mobility happens to occur in densely black populations, the researchers note. It is a rich-poor issue rather than a black-white issue, as children of all races from areas with large black populations have less upward mobility.

2. Segregation. The researchers found that upward mobility is hurt by racial segregation, income segregation and sprawl. Higher-income people are less willing to invest in things like public transportation, which tend to isolate the poor from opportunities such as good schools and jobs. The lack of transportation keeps the poor yet another step away from the American Dream and getting out of impoverished areas.

3. Social Capital. Chances for upward mobility increase when living around the middle class, as strong networks of better jobs, schools, religious groups and civic groups provide Americans a safety net. Strong religious beliefs are very strongly positively correlated with upward mobility, while crime rates are negatively correlated with mobility.

4. Inequality. The top 1 percent getting even richer didn't have an effect on the bottom 99 percent, according to the study. The bigger the gap, the less mobility within the 99 percent. The smaller the gap, the more mobility.

5. Family Structure. The study suggests that of all the factors, family structure is the most important for upward mobility. Upward mobility is more likely in committed, two-parent households.

According to The Atlantic, Americans living in San Jose, Salt Lake City and Pittsburg are living out the dream, but the dream has failed to include those living in Atlanta, Raleigh, N.C., Charlotte, Indianapolis, Detroit and Jacksonville, Fla., who are "licked before they can begin."

 America needs to take a closer look at countries such as Denmark, Finland and Sweden, as the American Dream is alive and well overseas.

 "There are more neighborhoods where poverty is more concentrated and wealth is more concentrated," Patrick Sharkey, a sociology professor at New York University who helped lead the study, tells Reuters.

 When considering the power of American cities, Sharkey notes, "it's a trend that makes us think that cities will become less of an engine for economic mobility if they keep trending toward a scenario where the rich live in separate communities from the poor."

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