North and South: American Deindustrialization and Intergenerational Income Mobility

• In Event: 411 - Section on Inequality, Poverty, and Mobility Refereed Roundtable Session and Business Meeting
  In Refereed Roundtable 60min: Table 09. Social and Economic Mobility

Abstract

In this paper, we try to answer the research question whether or not the American deindustrialization has prevented individuals from upward social mobility. We hypothesize that regions with more job losses in manufacturing have lower rates of intergenerational income mobility. In order to reveal casualty rather than merely association, we use the regional variation in exposure to Chinese imports, which could be regarded as an exogenous shock, as the instrument for our key independent variable "the change of manufacturing employment share". The 2SLS estimates suggest that deindustrialization only lowers income mobility rate in the Southern Unites States but not in the Northern areas. The North-South difference in the initial level of deindustrialization might account for the heterogenous effects of manufacturing employment share.

Author

• Fangqi Wen, New York University