Intergenerational mobility provides a measure of how well children are faring relative to their parents. What are the chances that a child born to parents in the bottom quintile will move to the top of the income distribution? Is the child in a higher income quintile relative to the parents, or other peers? These comparisons are typically done around the age of 30 because income at 30 is a strong predictor of earnings for the rest of one’s life. However, a growing body of evidence suggests that the trajectory of a child’s life may be determined to a large extent at much younger ages, perhaps at five years old or even younger. Lifetime success may be influenced by factors beyond children’s control, such as whether they are brought up in a two-parent or single parent household, whether their parents have high incomes or low incomes, whether their home life was stable or stressful, and which neighborhoods they grew up in. It turns out that all of these factors matter tremendously in how they will fare at age 30.
Robert Putnam’s book “Our Kids” highlights the stark contrast in life experiences between children growing up in wealthy households with two highly-educated parents and children growing up in poorer households that often have only one less-educated parent. Putnam’s book collects anecdotal evidence through interviews and surveys of people around the country. While there is no one statistical database that would capture all of these effects, it is clear that what matters for children’s mobility is parent’s income, family structure and geography. Here are the numbers.
Parental Input: Money
Let’s look first at child poverty. According to 2013 data from the Census Bureau, twenty percent of children under the age of six live in poverty. For children living with single mothers, the poverty rate was 55 percent, markedly higher than the 10 percent rate for children living in married-couple households. Children growing up with single mothers have access to far fewer resources and opportunities than children living with high income, married-couple parents. A 2014 report from the USDA shows that a typical husband-wife family spends 50 percent more on child-related expenditures compared to a single parent family. Moreover, this gap holds among children of all ages. As an example, for children 5 years of age, a husband-wife couple with one child spends an average of $16,210 on child-related expenses whereas a single parent household spends only $11,620. The gap is wider for larger family sizes.
Parental Input: Education and Time
Women are the primary caregivers for children, on average. The American Time Use Survey shows that women spend almost twice as much time on childcare activities compared to men. This is particularly true when children are under the age of six. These involve physical care activities, education, reading to, playing with and traveling with children. All parental inputs matter for children, but the time use data suggest that the mother’s educational background and the amount of time she devotes to her children could be even more important for children’s development.
This is a particularly relevant finding in light of America’s changing family structures and the rise in homes headed by single mothers. As mentioned before, the poverty rate for single mother households is more than five times that for families headed by a married parent and the rise in single mothers explains much of the rise in poverty in recent decades. However, aside from income, another area of concern is often the lack of education and time spent with children. As I have written earlier, single mothers typically have low levels of education. Studies show that if a single mother is poor and has no college education, the children are disadvantaged when it comes to readiness for starting school. Further, single mothers are more likely to work non-standard schedules. This likely leaves them little time to provide the same investments in their children as married mothers do. This is documented by Sara McLanahan, who shows that children born to more educated women are gaining resources while those born to the least-educated are losing them.
Neighborhoods
Aside from parental inputs, geography matters as well. Individuals who live in high-poverty areas experience much worse outcomes than those who live in lower-poverty neighborhoods. Communities with greater residential segregation, poor quality schools, and high teenage pregnancy and high school drop-out rates offer reduced upward mobility. The longer the time children spend in such areas, the less likely they are to complete high school and the worse their long-term outcomes will likely be.
Impact on Mobility via Test Scores and College Attendance
All these factors impact children’s achievement in school and over their lifetimes. A recent study shows that the difference in test scores between children from high and low income families is roughly 30 to 40 percent larger among children born in 2001 than among those born in 1976. This gap exists immediately when the children begin kindergarten and persists as children get older. As per the study’s authors, this gap is likely driven by increasing parental investment in children’s cognitive development, rather than income inequality per se, since the same income difference now corresponds to a 30 to 60 percent larger gap in achievement than it did in the 1970s.
Susan Dynarski writes that a child born into a poor family has only a 9 percent chance of getting a college degree but the odds are 54 percent for a child in a high income family. Moreover, boys in single parent households were significantly less likely to go to college. Chetty et al. document that high income households are significantly more likely to have kids going to college than low-income kids. This obviously matters for lifetime earnings since National Center for Education Statistics estimate that workers without a bachelor’s degree earn about $20,000 less on average than those with a bachelor’s degree.
The evidence is clear. To improve economic mobility for future generations, we need to start early. Adding resources to poor households by expanding programs like the EITC that encourage work would not only help the parents but also the children. Research finds that the EITC expansion in the Tax Reform Act of 1986 significantly increased labor force participation, especially among less-educated single mothers. Using data from the National Longitudinal Survey of Youth, Dahl and Lochner found that a $1,000 increase in income as a result of the EITC raises children’s combined math and reading test scores in the short-run. In addition, I have written earlier about considering ways to fund maternity leave through using existing child related tax credits. This would encourage labor force participation for women and allow them to invest in their long-term career. Finally, experimenting with measures to allow families to move to neighborhoods with better opportunities and environments is critical as well. Research shows that when families move from high-poverty areas into lower-poverty areas using housing vouchers, this significantly improves children’s college attendance rates and lifetime earnings, provided this happens early in life.
If we want our young adults to realize the American Dream, we need to start the hard work now when they are kids.
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