Family Characteristics and Macroeconomic Factors in U.S. Intragenerational Family Income Mobility, 1978–2014
A family’s position in the income distribution and the degree to which it can improve that position during a period of years (intragenerational mobility) are critical determinants of the family’s current well-being and the prospects for the children. Likewise, a wealthy family’s ability to retain a top position in the income distribution is central to its well-being. Using data from the Panel Study of Income Dynamics that tracks individual families’ incomes, this paper investigates the relationships of family characteristics and macroeconomic influences to moves up and down the income distribution during overlapping 10-year periods from 1978 through 2014. The family characteristics examined include levels of work behavior, family structure, and race and educational attainment of the family head and spouse, if there is one; the macroeconomic influences include GDP growth and inflation. This paper also studies whether the importance of these factors has changed since the 1980s.
- Of all the characteristics studied, the educational attainment of the head and the wife (if one is present) has the strongest effect on a family’s upward mobility. High educational attainment of wives has given more of a positive boost to mobility in recent periods than it did earlier.
- Families in which the head and wife (if there is one) are working experience greater upward mobility than families with an unemployed or out-of-labor-force head or wife.
- Men and women who become married during a 10-year period are more upwardly mobile during that period than men and women who stay single. When a marriage ends—through divorce, separation, or death—men tend to move up and women to move down, especially younger men and older women.
- Families starting a period with no children and ending it with one or more children are less upwardly mobile during the period than families who remain childless. This is especially the case for families starting at the middle and top of the income distribution.
- Families with a nonwhite head experience less upward mobility than families with a head who is white, but families with a nonwhite head have faced less disadvantage in recent periods than in the 1980s.
- Families tend to move up more in real dollar terms during periods with stronger real GDP growth and, controlling for family characteristics, there is more upward relative mobility when inflation is higher.
The growing inequality of the family income distribution in the United States is well documented. Rising intragenerational mobility could offset some of the effects of rising cross-sectional inequality on longer-term or lifetime inequality, while falling intragenerational mobility would likely exacerbate those effects. Furthermore, a family’s upward movement can enhance the children’s prospects; that is, rising intragenerational mobility may lead to rising intergenerational mobility.
This paper’s findings regarding educational attainment reinforce widely accepted beliefs about the income-related benefits of a good education. They also suggest policies that might improve equality of opportunity or intergenerational mobility. For example, universal preschool, which appears to reduce income-related disparities in children’s school success, could improve the prospects of children from families with single female heads or nonwhite heads, given that, according to this paper’s findings, such families face mobility disadvantages.
In addition, because having a family head, spouse, or both employed and working longer hours is associated with greater upward mobility, policies that improve job access and job quality for disadvantaged parents could improve the prospects for their children.
Family economic mobility has been a policy concern for decades, with interest heating up further since the 1990s. Using data that tracks individual families’ incomes during overlapping 10-year periods from 1978 through 2014, this paper investigates the relationships of factors—family characteristics and macro influences—to intragenerational mobility and whether the importance of those factors has changed over time. Family characteristics include both levels of work behavior and family structure and within-period changes in those factors, as well as time-invariant characteristics of the family head, such as race. Macro factors include indicators of GDP growth and inflation during each 10-year period. The positions families occupy in the income distribution and the degree to which they are stuck or able to move up (or slide down) over time are critical determinants of their current well-being and their children’s prospects.