Tuesday, May 30, 2006

U.S. Not the Land of Opportunity, New Studies Show

Recent studies in Britain and Germany, reported this week in the Economist, show that European countries have much more social mobility than the United States.

The studies measured the income of fathers and sons. A socially immobile county (one where the incomes of fathers and sons are the same - the rich stay rich and the poor stay poor) was given a 1. A completely socially mobile country (one where the prosperity of sons is not at all predetermined by their fathers) was given a zero. The scores reported in the Economist were:

Nordic countries: 0.2
Britain: 0.36
USA: 0.54

The Economist went on to say,

The biggest finding of the studies is not, however, about overall social mobility, but about mobility at the bottom. This is the most distinctive feature of Nordic societies, and it is also perhaps the most significant difference with America. Around three-quarters of sons born into the poorest fifth of the population in Nordic countries in the late 1950s had moved out of that category by the time they were in their early 40s. In contrast, only just over half of American men born at the bottom later moved up. This is another respect in which Britain is more like the Nordics than like America: some 70% of its poorest sons escaped from poverty within a generation.

The Nordic countries are distinctive in one further way: the sons born at the bottom (into the poorest fifth) earn roughly the same as those born a rung above them (the second-poorest fifth). In other words, Nordic countries have almost completely snapped the link between the earnings of parents and children at and near the bottom. That is not at all true of America.

...The obvious explanation for greater mobility in the Nordic countries is their tax and welfare systems, which (especially when compared with America's) deliberately try to help the children of the poor to do better than their parents. One might expect social mobility and economic flexibility to go together—in fact, to be two sides of the same coin. But to the extent that redistribution is an explanation, it implies the opposite: that social mobility is a product of high public spending, a bit like the low incidence of poverty or longer life expectancy (on both of which Europe also does better than America). But greater public spending tends also to be associated with less economic flexibility—which is why Nordic countries have sought to limit the more arthritis-inducing features of their tax-and-spend programmes.

...For Europe, the secrets of greater social mobility are, first, tough redistribution policies that particularly benefit those at the bottom; and, especially in Nordic countries, a more supple and less class-ridden education system, running from top to bottom. America could learn something from that.

The studies are “Non-linearities in Inter-generational Earnings Mobility” (Royal Economics Society, London) and “American Exceptionalism in a New Light” (Institute for the Study of Labour, Bonn), both by Bernt Bratsberg, Knut Roed, Oddbjorn Raaum, Robin Naylor, Markus Jantti, Tor Eriksson, Eva Osterbacka and Anders Bjorklund.


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