The Association Between Childhood Exposure to Local Wealth Inequality and Intergenerational Income Mobility in the US

• In Event: 30852 - Wealth

Abstract

High income inequality is associated with low intergenerational mobility in income. Researchers speculate that income inequality affects upward mobility because exposure to socioeconomic disparities during childhood influences economic opportunities. Beyond income, wealth is also distributed unequally and can facilitate the hoarding of opportunities among the wealthy. This study investigates whether local wealth inequality is negatively associated with intergenerational income mobility. To examine the impact of childhood exposure to local wealth inequality on upward mobility in income, the study builds on a recently published database of local wealth inequality estimates across the United States (GEOWEALTH-US) as well as upward mobility estimates published by Opportunity Insights. Results from linear models estimated by OLS reveal a clear, negative association between childhood exposure to local wealth inequality at the commuting zone level (N=724) and mobility outcomes later in life. This relationship persists when accounting for levels of income, wealth, and income inequality, as well as other economic and demographic characteristics. Static simulations suggest that childhood exposure to local wealth inequality has more significant consequences for upward income mobility than income inequality itself. Finally, consistent with previous literature, one pathway through which exposure to local wealth inequality might affect upward mobility is through its negative effect on educational attainment of low-income children.

Author

• Manuel Schechtl, University of North Carolina at Chapel Hill