| Topic List | Page List: 1 |
|---|---|
| Topic | New studies show that the poorest workers accrue the largest economic gains |
| FLUFFYGERM 10/25/18 1:37:14 PM #2: | Chetty et al find a similar pattern. In an otherwise gloomy assessment of American progress, they find that 70% of children born in 1980 into the bottom decile exceed their parents income in 2014. For those born in the top 10%, only 33% exceed their parents income. The poor may find it easier to do better than their parents. But how much better off do they end up? Julia Isaacss study for the Pew Charitable Trusts finds that children raised in the poorest families made the largest gains as adults relative to children born into richer families. The children from the poorest families ended up twice as well-off as their parents when they became adults. The children from the poorest families had the largest absolute gains as well. Children raised in the top quintile did no better or worse than their parents once those children became adults. One explanation of these findings is there is regression to the mean if your parents are particularly unlucky, they may find themselves at the bottom of the economy. You, on the other hand, can expect to have average luck and will find it easier to do better than your parents. At the other end of the income distribution, one reason you might have very rich parents is that they have especially good luck. You are unlikely to repeat their good fortune, so you will struggle to do better than they did. But that doesnt change what actually happened in the last three decades of the 20th century in the Isaacs study: the children from the poorest families added more to their income than children from the richest families. That reality isnt consistent with the standard pessimistic story that only the richest Americans have benefited from economic growth over the last 3040 years. Or that only the richest Americans have gotten raises. The pessimistic story based on comparing snapshots of the economy at two different points in time misses the underlying dynamism of the American economy and does not accurately measure how workers at different places in the income distribution are doing over time. Gerald Auten, Geoffrey Gee, and Nicholas Turner of the Office of Tax Analysis in the Treasury Department used tax returns to see how rich and poor did between 1987 and 2007. They find the same encouraging pattern: poorer people had the largest percentage gains in income over time: The study looks at people who were 3540 in 1987 and then looks at how they were doing 20 years later, when they are 5560. The median income of the people in the top 20% in 1987 ended up 5% lower twenty years later. The people in the middle 20% ended up with median income that was 27% higher. And if you started in the bottom 20%, your income doubled. If you were in the top 1% in 1987, 20 years later, median income was 29% lower. --- Do good. Eat communists. ... Copied to Clipboard! |
| Topic List | Page List: 1 |