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William A. Sundstrom
Department of Economics
Santa Clara University
wsundstrom@scu.edu
Economic opportunity or
low-income ...
Thanks to…
• Step Up Silicon Valley, http://stepupsv.org/
• Bannan Institute, Ignatian Center for Jesuit Education at Sant...
The poverty-reducing impacts of the nation's social safety
net have been facing the headwind of increasing
inequality of e...
The poverty-reducing impacts of the nation's social safety
net have been facing the headwind of increasing inequality
of e...
The poverty-reducing impacts of the nation's social safety
net have been facing the headwind of increasing inequality
of e...
“Upward mobility for poor children”
• What have we learned?
• How much intergenerational mobility is there?
• Is there a g...
Persistence of poverty
• Poverty remains a persistent problem in affluent America… and in
affluent Silicon Valley
Source: http://www.cbpp.org/research/poverty-and-inequality/chart-book-accomplishments-of-the-safety-net
Poverty in Santa Clara County, 2014
USA
Santa Clara
County
Everyone: Official 15% 9%
Children: Official 22% 9%
Poverty in Santa Clara County, 2014
USA
Santa Clara
County
Everyone: Official 15% 9%
Children: Official 22% 9%
Everyone: S...
Why haven’t we solved this problem?
• Structural changes in the economy loom large
• Especially, unequal sharing of gains ...
Challenge of generational poverty
• Poverty status transmitted across generations
• Challenge to the “American creed” of e...
Concerns have been around a long time
“These are people who lack
education and skill, who have bad
health, poor housing, l...
Feedback loops
• Harrington and many others have linked intergenerational
persistence to a “culture of poverty”
• But ther...
Investment in
human and
social capital
Next
generation’s
resources
Parental
resources,
neighborhood
On the other hand…
• Many forces counteract negative feedback loops
• Despite its shortcomings and inequities, public educ...
Intergenerational income mobility in USA
• New evidence and insights from large team led by Raj Chetty at
Stanford
• http:...
Intergenerational mobility by income rank
• Thought experiment: Start with a kid who is 15 years old in 2000
• Determine h...
3040506070
0 20 40 60 80 100
Parent Income Rank
1971-74 1975-78 1979-82
71-74 Slope = 0.299
(0.009)
75-78 Slope = 0.291
(0...
Implication for generational poverty
• What percentage of kids raised below the poverty line will end up in
poverty as adu...
Opportunity and place
• On average, people who grow up poor do escape poverty
• But this average masks a lot of variation ...
The Geography of Intergenerational Mobility in the United States
Predicted Income Rank at Age 26 for Children with Parents...
Corr. with baseline 𝑦25 = 0.98 (unweighted), 0.86 (pop-weighted)
Adjusted for local cost of living
Upwardly mobile places have…
• Less segregation by income and race
• Lower levels of income inequality
• Better schools
• ...
Generational poverty?
• Nationally, most people who grow up poor are not caught in an
intergenerational “poverty trap”
• B...
Preventing generational poverty
• What can be done to reverse generational poverty where it occurs,
and prevent it elsewhe...
Investment in
human and
social capital
Next
generation’s
resources
Parental
resources,
neighborhood
Investment in
human and
social capital
Next
generation’s
resources
Parental
resources,
neighborhood
Income and safety net policies
• Income support
• EITC
• Making work pay: jobs, training, minimum wage
• The safety net
• ...
Income and safety net policies
• Does just giving families more resources help the kids long-run?
• Growing body of eviden...
Strengthening communities
• Importance of place suggests these may be important, but research
on long-run effects lacking…...
Investment in
human and
social capital
Next
generation’s
resources
Parental
resources,
neighborhood
Investing in children
• Education and early childhood development
• Return to human capital – both quantity and quality – ...
Investing in children
• When do we get the most bang for our buck?
• Earlier investments should be more effective
• Young ...
Early childhood interventions: the evidence
• Paradox: Many studies find
modest short-run impacts on
cognitive skills and ...
Summing up
• Poverty is not destiny
• We know strategies that work
• We know more strategies that we expect will work… but...
Thank you, and keep up the good work!
Learning and Development: Preventing Generational Poverty | Economic opportunity or low-income trap?  Lessons from recent ...
Learning and Development: Preventing Generational Poverty | Economic opportunity or low-income trap?  Lessons from recent ...
Learning and Development: Preventing Generational Poverty | Economic opportunity or low-income trap?  Lessons from recent ...
Learning and Development: Preventing Generational Poverty | Economic opportunity or low-income trap?  Lessons from recent ...
Learning and Development: Preventing Generational Poverty | Economic opportunity or low-income trap?  Lessons from recent ...
Learning and Development: Preventing Generational Poverty | Economic opportunity or low-income trap?  Lessons from recent ...
Learning and Development: Preventing Generational Poverty | Economic opportunity or low-income trap?  Lessons from recent ...
Learning and Development: Preventing Generational Poverty | Economic opportunity or low-income trap?  Lessons from recent ...
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Learning and Development: Preventing Generational Poverty | Economic opportunity or low-income trap? Lessons from recent research on intergenerational mobility in the United States.

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The persistence of poverty in America and the dramatic increase of economic inequality in recent decades have garnered growing public awareness. Isn't the United States at least a land of economic opportunity, in which those who start lower on the economic ladder have a reasonable expectation that they, or their children, might advance into the middle class? Or are we at risk of being a caste society, in which multiple generations are trapped in a cycle of relative deprivation, while others inherit the security of a “gilded” lifestyle?

Important recent research by social scientists has shown that intergenerational economic mobility in the United States is low compared with many other wealthy countries, and that opportunity is unevenly distributed across the country. In this presentation, Professor Sundstrom will summarize some of these findings, including what they have to say about opportunity in the Silicon Valley region. He will provide an overview of the potential causes of intergenerational persistence in income status, and the implications for community and policy strategies for increasing opportunity.

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Learning and Development: Preventing Generational Poverty | Economic opportunity or low-income trap? Lessons from recent research on intergenerational mobility in the United States.

  1. 1. William A. Sundstrom Department of Economics Santa Clara University wsundstrom@scu.edu Economic opportunity or low-income trap? Lessons from recent research on intergenerational mobility in the United States
  2. 2. Thanks to… • Step Up Silicon Valley, http://stepupsv.org/ • Bannan Institute, Ignatian Center for Jesuit Education at Santa Clara University, https://www.scu.edu/ic/programs/bannan-institutes/
  3. 3. The poverty-reducing impacts of the nation's social safety net have been facing the headwind of increasing inequality of earnings and family income, and reductions in real market income of individuals and families at the bottom of the distribution. This growing inequality of wages and income appears to have large intergenerational effects as parental support for children is directly related to family economic position and to the education and resources of parents. The drive for increased equality of opportunity and upward mobility for poor children is a topic of growing interest and includes support for more and better preschool education as well as calls for parenting and “two-generation” programs. Haveman et al, “The War on Poverty: Measurement, Trends, and Policy”
  4. 4. The poverty-reducing impacts of the nation's social safety net have been facing the headwind of increasing inequality of earnings and family income and reductions in real market income of individuals and families at the bottom of the distribution. This growing inequality of wages and income appears to have large intergenerational effects as parental support for children is directly related to family economic position and to the education and resources of parents. The drive for increased equality of opportunity and upward mobility for poor children is a topic of growing interest and includes support for more and better preschool education as well as calls for parenting and “two-generation” programs. Haveman et al, “The War on Poverty: Measurement, Trends, and Policy”
  5. 5. The poverty-reducing impacts of the nation's social safety net have been facing the headwind of increasing inequality of earnings and family income and reductions in real market income of individuals and families at the bottom of the distribution. This growing inequality of wages and income appears to have large intergenerational effects as parental support for children is directly related to family economic position and to the education and resources of parents. The drive for increased equality of opportunity and upward mobility for poor children is a topic of growing interest and includes support for more and better preschool education as well as calls for parenting and “two-generation” programs. Haveman et al, “The War on Poverty: Measurement, Trends, and Policy”
  6. 6. “Upward mobility for poor children” • What have we learned? • How much intergenerational mobility is there? • Is there a generational poverty “trap”? • What factors are associated with intergenerational mobility? • What kinds of policies and interventions work to prevent generational poverty?
  7. 7. Persistence of poverty • Poverty remains a persistent problem in affluent America… and in affluent Silicon Valley
  8. 8. Source: http://www.cbpp.org/research/poverty-and-inequality/chart-book-accomplishments-of-the-safety-net
  9. 9. Poverty in Santa Clara County, 2014 USA Santa Clara County Everyone: Official 15% 9% Children: Official 22% 9%
  10. 10. Poverty in Santa Clara County, 2014 USA Santa Clara County Everyone: Official 15% 9% Children: Official 22% 9% Everyone: Supplemental 15% 17% Children: Supplemental 17% 19% Sources: https://www.census.gov/content/dam/Census/library/publications/2015/demo/p60-254.pdf http://www.ppic.org/main/publication_show.asp?i=261 http://www.ppic.org/main/publication_show.asp?i=721
  11. 11. Why haven’t we solved this problem? • Structural changes in the economy loom large • Especially, unequal sharing of gains from economic growth since the 1970s • But another recurrent concern: Is poverty so persistent because people become “trapped” in poverty? • These concerns melded with fears that policies associated with the War on Poverty may only have made things worse
  12. 12. Challenge of generational poverty • Poverty status transmitted across generations • Challenge to the “American creed” of equal opportunity • Challenge to social science: Can we measure it? What causes it? • Challenge to policy: breaking the vicious circle
  13. 13. Concerns have been around a long time “These are people who lack education and skill, who have bad health, poor housing, low levels of aspiration and high levels of mental distress.…Each disability is the more intense because it exists within a web of disabilities. And if one problem is solved, and the others are left constant, there is little gain.” Michael Harrington The Other America (1962)
  14. 14. Feedback loops • Harrington and many others have linked intergenerational persistence to a “culture of poverty” • But there are structural sources of disadvantage too… • Children in poverty tend to: • Receive education of lower quantity and quality • Have lower nutritional and health status and less access to quality health care • Live in more stressful, violent, and polluted places • Develop fewer valuable social connections • Suffer from greater segregation and racial discrimination
  15. 15. Investment in human and social capital Next generation’s resources Parental resources, neighborhood
  16. 16. On the other hand… • Many forces counteract negative feedback loops • Despite its shortcomings and inequities, public education provides many skills and access to opportunities • Kids and communities are resilient • Luck plays a role • So does place… and people do move around • What is the balance of these forces for persistence across generations (poverty trap) vs. mobility? • A look at the evidence
  17. 17. Intergenerational income mobility in USA • New evidence and insights from large team led by Raj Chetty at Stanford • http://www.equality-of-opportunity.org/ • Using tax records to link people across generations and track their incomes… Big data! • How does your income as an adult depend on the income of your parents when they were raising you?
  18. 18. Intergenerational mobility by income rank • Thought experiment: Start with a kid who is 15 years old in 2000 • Determine her family’s pre-tax annual income: Where do they rank in the national income distribution (percentile)? • Family in the middle: about $60,000 • Family at rank 10th/100: $15,000 • At rank 90th/100: $145,000 • Now track that same kid to age 30 in 2015. Where does she rank?
  19. 19. 3040506070 0 20 40 60 80 100 Parent Income Rank 1971-74 1975-78 1979-82 71-74 Slope = 0.299 (0.009) 75-78 Slope = 0.291 (0.007) 79-82 Slope = 0.313 (0.008) Child Income Rank vs. Parent Income Rank by Birth CohortMeanChildIncomeRank
  20. 20. Implication for generational poverty • What percentage of kids raised below the poverty line will end up in poverty as adults? • They don’t answer this, but using their table, we can estimate it • Glass half empty interpretation: about a quarter (27%) will be poor as adults. • Glass half full interpretation: Despite adverse economic conditions, about three-quarters do “escape” poverty.
  21. 21. Opportunity and place • On average, people who grow up poor do escape poverty • But this average masks a lot of variation across individuals and places • Source for maps: http://www.equality-of-opportunity.org/assets/documents/mobility_geo.pdf
  22. 22. The Geography of Intergenerational Mobility in the United States Predicted Income Rank at Age 26 for Children with Parents at 25th Percentile
  23. 23. Corr. with baseline 𝑦25 = 0.98 (unweighted), 0.86 (pop-weighted) Adjusted for local cost of living
  24. 24. Upwardly mobile places have… • Less segregation by income and race • Lower levels of income inequality • Better schools • Lower rates of violent crime • More social capital • Larger share of two-parent households
  25. 25. Generational poverty? • Nationally, most people who grow up poor are not caught in an intergenerational “poverty trap” • But there are places where it is much more likely to happen: • Segregated urban areas, esp. in the “Rust Belt” • Areas of the South and Southwest with large concentrations of people of color
  26. 26. Preventing generational poverty • What can be done to reverse generational poverty where it occurs, and prevent it elsewhere? • No one-size-fits-all policy solutions: different families in different places face different challenges • Still, we actually know a lot about policies and interventions that work for many
  27. 27. Investment in human and social capital Next generation’s resources Parental resources, neighborhood
  28. 28. Investment in human and social capital Next generation’s resources Parental resources, neighborhood
  29. 29. Income and safety net policies • Income support • EITC • Making work pay: jobs, training, minimum wage • The safety net • SNAP, Medicaid, housing assistance, etc.
  30. 30. Income and safety net policies • Does just giving families more resources help the kids long-run? • Growing body of evidence says yes • Effects of EITC, food stamps, on educational achievement, health, and income • Even temporary help important • In other words, one can address “root causes” by treating “symptoms”
  31. 31. Strengthening communities • Importance of place suggests these may be important, but research on long-run effects lacking… • Neighborhood economic development • Environmental justice • Public safety • Reducing discrimination • Mitigating impact of mass incarceration
  32. 32. Investment in human and social capital Next generation’s resources Parental resources, neighborhood
  33. 33. Investing in children • Education and early childhood development • Return to human capital – both quantity and quality – larger than ever… • … but educational inequities are large and may be growing: income-achievement gap has widened
  34. 34. Investing in children • When do we get the most bang for our buck? • Earlier investments should be more effective • Young brains are more “plastic” • Learning dynamics: skills beget skills Sources: See https://heckmanequation.org/
  35. 35. Early childhood interventions: the evidence • Paradox: Many studies find modest short-run impacts on cognitive skills and outcomes, but these often fade out within a few years • But a number of studies have found large positive long-run impacts of high-quality early child development interventions in terms of incomes, crime, etc. • Perry Preschool Project: 1960s • Carolina Abecedarian: 1970s • Head Start • Now a widely accepted policy prescription
  36. 36. Summing up • Poverty is not destiny • We know strategies that work • We know more strategies that we expect will work… but the evidence is not in • We should strive to: • Protect and expand income transfers and the safety net • Invest more in disadvantaged kids • Mobilize politically for positive change • Experiment and learn!
  37. 37. Thank you, and keep up the good work!

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