Mobility Partnership member Raj Chetty is being credited with quantifying the state of the American Dream: it is not nearly as robust as it used to be.
In The Fading American Dream: Trends in Absolute Income Mobility Since 1940, Chetty and his co-authors use Census data to compare the incomes of 30-year-olds decade by decade to those of their parents. In 1970, nearly everyone, 92 percent of 30-year-olds, made more than their parents, but that percentage has fallen precipitously since then, to 62 percent in 1990 and just 50 percent in 2010.
Slower GDP growth is one factor in the decline in upward mobility. But the spike in inequality since 1970 has had an even larger impact.
“The finding of this study implies that if we want to revive the American Dream of increasing living standards across generations, then we’ll need policies that foster more broadly shared growth,” Chetty said.