Economic Mobility in the U.S. and Denmark

Tara B. drew my attention to a New York Times article on economic mobility in the U.S. and Europe. This chart compares intergenerational mobility in the U.S. and Denmark, showing where men raised in each quintile of the population (based on income) end up as adults (lighter bars = Denmark, dark bars = U.S.):

For both countries, there is more movement in the middle of the income distribution than at the extremes. However, there are important differences. As we see, in the U.S. men whose dads were in the bottom fifth in terms of income are much more likely to remain in the bottom earnings tier than men in Denmark are, with over 42% experiencing no mobility. We also see that they are less likely to move to the highest levels of the income ladder than are their Danish equivalents. However, this is partially due to differences in the overall distribution in income; because there is more income inequality in the U.S., an individual would have to gain much more income to make it from the lowest to the highest quintile than would someone living in Denmark, where the income distribution is more compact.

The full article from which this data is drawn, “American Exceptionalism in a New Light: A Comparison of Intergenerational Earnings Mobility in the Nordic Countries, the United Kingdom and the United States,” is available for free here.

Comments 17

Anonymous — January 5, 2012

This TED talk offers compelling research about social mobility (among other things), and how it is correlated not with wealth of a country but with its equality (as in, countries with smaller income/wealth distribution have, among many other good outcomes, higher socioeconomic mobility):

http://www.ted.com/talks/richard_wilkinson.html

Yrrosimyarin — January 5, 2012

Good job on you and the article on catching this important fact:

The income compression in rival countries may also make them seem more
mobile. Reihan Salam, a writer for The Daily and National Review Online,
has calculated that a Danish family can move from the 10th percentile
to the 90th percentile with $45,000 of additional earnings, while an
American family would need an additional $93,000.

A Pew study
found that 81 percent of Americans have higher incomes than their
parents (after accounting for family size). There is no comparable data
on other countries.

Personally, I want to see the comparison of the second done between countries. It's really too bad that there isn't a cross-country study of that available (at least, according to the article). These studies are largely measuring the same value twice.

BFR — January 5, 2012

I also read this article and had a question about the assertion that "income compression" (as its called in the article) leads to an appearance of greater mobility. Couldn't the causal relationship actually go the other way (or both ways)? Might more mobility, particularly upward mobility, eventually lead to an economy in which the real incomes of the top and bottom quintiles were closer together? Actually drawing that conclusion is beyond the scope of the studies in this article, of course. But the assumption in the article -- that income compression is an independent factor that increases mobility -- might also be worth investigating.

Gilbert Pinfold — January 5, 2012

It would be interesting to see the numbers normalized for race.

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