Harvard’s Raj Chetty on upward mobility in America

Defining and Measuring the American Dream

• The core metric used is the percentage of children earning more than their parents by age 35, adjusted for inflation.
• For children born in 1940, there was a 92% probability of earning more than their parents.
• For children born in the mid-1980s, this probability dropped to approximately 50%, representing a "fading American dream."
• The decline in social mobility correlates strongly with political support for populist candidates in affected regions.

Geographic Disparities and the Opportunity Atlas

• Analysis of 20 million tax records reveals massive variation in mobility across 740 U.S. metro and rural areas.
• Mobility differences exist at the hyper-local level; a two-mile drive in New York City can shift a child's prospects from Alabama-level to Iowa-level mobility.
• Dubuque, Iowa: Children from low-income families (25th percentile) have high chances of reaching the middle class.
• Charlotte, North Carolina: Despite economic growth, children from low-income families earn less than their parents on average by age 35.
• The Opportunity Atlas (opportunityatlas.org) allows users to view these mobility statistics down to the census tract level.

Key Drivers of Upward Mobility

• Four primary predictors of higher economic mobility have been identified through data analysis:
  • Lower poverty rates and more mixed-income communities.
  • Stable family structures, specifically a higher prevalence of two-parent families.
  • Access to better K-12 and higher education institutions.
  • Greater social capital (cross-class interaction).
• Social Capital: Measured via collaboration with Meta (Facebook), this metric tracks the fraction of friends with above-median income for low-income users.
• Cross-class interaction is the single strongest predictor of economic mobility, more so than race, gender, or education access in isolation.

Structural Causes of the Decline

• The "race between education and technology" has shifted since roughly 1980.
• Educational attainment has stalled while technological progress and global competition have accelerated, leaving human skills behind.
• Increased stratification has reduced cross-class interaction and community stability, contributing to the erosion of opportunity.
• Trade and automation exert pressure on workers, necessitating a shift from resisting change to equipping people to compete.

Inefficiencies and Investment Gaps

• There is a "public goods problem" where high social returns on investment (e.g., lower crime, higher innovation) do not yield private returns, leading to underinvestment in mobility initiatives.
• Current affordable housing spending (approx. $25 billion annually) is largely ineffective because vouchers alone do not provide the social support needed to move to high-opportunity neighborhoods.
• Successful interventions combine financial aid with social capital support (e.g., counseling and brokerage services), which cost only a few thousand dollars per family but significantly alter housing choices and outcomes.

Higher Education and the "Access-Outcome" Gap

• A scatter plot of U.S. colleges shows a critical gap: few institutions provide both high access to low-income students and high upward mobility rates for graduates.
• Elite institutions like MIT and Stanford have a 70% upward mobility rate for low-income students, yet low-income students comprise only ~3% of Harvard's student body.
• Community colleges often serve many low-income students but show lower upward mobility outcomes.
• Vaughan College of Aeronautics and Technology is highlighted as a rare success case, combining high access for low/middle-income students with strong technical training that leads to upper-middle-class earnings.

Racial Trends and Data Interpretation

• For white children born to low-income families, upward mobility has declined significantly between the 1978 and 1992 birth cohorts, with "red" (low mobility) areas spreading across the country.
• For Black children in the same cohorts, upward mobility has increased, with "green" (high mobility) areas expanding.
• Despite improvement, a massive racial gap persists: the best places for Black mobility still yield worse outcomes than the worst places for white mobility.
• The racial mobility gap has narrowed by approximately one-third over the last 15 years.

Local Action and Future Outlook

• Charlotte, NC: Following data publication, local stakeholders invested $160 million in workforce development, mentorship, and early childhood education, resulting in improved mobility metrics.
• Greg Shell notes concerns regarding federal retreat from social safety nets (education, housing, health).
• Dr. Raj Chetty expresses optimism rooted in local-level agency, noting that coalition building between the public, private, and philanthropic sectors can drive change without waiting for federal policy.
• The strategy recommended is to use data to sharpen existing investments (e.g., making housing vouchers more effective) rather than assuming one-size-fits-all solutions are viable.