Economic prospects brighten for children of low-income Black Americans, study finds

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Economic prospects brighten for children of low-income ****** Americans, study finds

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Economic prospects have improved in recent years for ****** Americans born poor, according to

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. At the same time, earnings have fallen for white Americans from low-income families.

The analysis, drawn from 40 years of tax and Census records, finds a dramatic narrowing of the economic divide between the poorest ****** and white Americans. But it also reveals a widening gap between low- and high-income white people, driven by shifts in the geography of employment.

“This is the first big data study to look at recent changes in economic opportunity within the same place over time,” said study co-author Benny Goldman, M.A., Ph.D., a research affiliate with Opportunity Insights. “And what we see are shrinking race gaps and growing class gaps.”

The research follows what Goldman called “a long history of folks studying intergenerational mobility.” That includes Opportunity Insights co-founder and director Raj Chetty, the William A. Ackman Professor of Public Economics and one of the study’s five co-authors. For more than a decade, Chetty has built an influential body of work demonstrating how access to the ********* Dream varies by region, race, and history.

Social scientists have found the patterns he uncovered to be persistent. For example, a Swedish demographer compared findings

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co-authored by Chetty on upward mobility across generations in the U.S. to the prevalence of slavery from the 1860 census. Counties with high rates of ******** at the outbreak of the Civil War

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for residents born more than 100 years later.

With the new study, Chetty, and others, set out to investigate whether these dynamics are changing. Anonymized records provided by the federal government were used to compare earnings at age 27 with socioeconomic factors from childhood. The sample included 57 million Americans born in 1978 or 1992.

Across the country, the sample’s ****** millennials fared better than its ****** Gen Xers. Individuals born in 1978 to low-income families (with earnings in the 25th percentile or lower) averaged $19,420 per year in early adulthood compared to an inflation-adjusted $21,030 for poorer members of the 1992 cohort.

Outcomes also improved slightly for children born to high-income ****** families, though researchers noted “noisier,” or less reliable, estimates for this population due to a small sample size.

Outcomes showed wide variation by region, with ****** Americans making the biggest strides in the Southeast and Midwest—areas traditionally associated with high rates of ****** ********.

“Take where I grew up in Kalamazoo, Michigan,” offered co-author Will Dobbie, a professor of public policy at Harvard Kennedy School and faculty research fellow at the National Bureau of Economic Research. “Poor ****** kids born there in 1992 were earning $4,700 more at age 27 than poor ****** kids born there in 1978, an incredible improvement in just a few years.”

Meanwhile, white Gen Xers from poorer families averaged $27,680 per year versus $26,150 for millennial peers. The gap between the poorest and richest white people ballooned by 28% over the same *******, as those born at the top watched their fortunes climb.

Results were particularly stark in a few regions of the country known for prosperity.

“Outcomes for low-income white children born in the ’90s from parts of Massachusetts, Connecticut, rural New York, and California started to look like Appalachia, the Southeast, and the industrial Midwest did for low-income white children born in the late ’70s,” noted Goldman, now a newly installed assistant professor of economics and public policy at Cornell University.

“This work reinforces the importance of childhood communities for outcomes in adulthood, consistent with our prior findings,” Chetty wrote in an email.

“But it shows that it is possible for these communities to change rapidly—within a decade—in a way that has significant causal effects on children’s long-term outcomes.”

To be sure, vast ******* disparities persisted. For Gen Xers who grew up poor, the ******* earnings gap between ****** and white Americans was $12,994. For millennials, it fell 27 percent to $9,521. In

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, modest changes in economic mobility were noted for Hispanic, ******, and Native ********* children.

As an additional aspect of their analysis, the researchers checked their findings against historic rates of parental employment at the neighborhood level. This approach was inspired by the work of Harvard sociologist William Julius Wilson, author of

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” (1996). “It was used as a broad way to measure the health of any given community where kids grew up,” Goldman explained.

The researchers saw that neighborhood employment tracked neatly with emerging race and class differences. “We found a sharp decline in employment rates among lower-income white parents relative to low-income ****** families and higher-income white families,” Goldman said.

Declining earnings were hardly the only negative associated with growing up amid low parental employment. In a testament to the power of social connections, places with fewer working parents also saw rising mortality and falling rates of marriage.

Yet this wasn’t a case of opportunity moving from one group to another, since neighborhoods with higher rates of ****** employment saw better outcomes for people of all races. “In areas where ****** kids did best, low-income white kids and their parents also did better,” Goldman said.

What’s more, the researchers found that moving to areas with strong parental employment was associated with higher earnings in early adulthood. According to Goldman, this was especially true for those who landed in the new neighborhood before the age of 10.

“Growing class gaps and shrinking race gaps did not result from unequal access to a booming economy,” he said. “Instead, what matters is how many years of childhood were spent in a thriving environment.”

More information:
Raj Chetty et al, Changing Opportunity: Sociological Mechanisms Underlying Growing Class Gaps and Shrinking Race Gaps in Economic Mobility, (2024).

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Economic prospects brighten for children of low-income ****** Americans, study finds (2024, August 1)
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