My article is New Perspectives on Income Mobility and Inequality, obviously, it aims to investigate the various aspects of income mobility and inequality. Some of these are individual mobility through their peak earnings years, mobility between generations and persistence of the top 1. Moreover the article also examines the long-term mobility across the life cycle, the intergenerational mobility, and the persistence of the Greatest and Silent Generation’s persistence at the top of the income distribution. The time period of data appeared in this article is between 1987-2010. The paper uses continuous data. These continuous data is from panel data and cross-sectional data sets of income tax returns and administrative tax records. For example, The data for 2007 come from tax returns in the LRS Compliance Data Warehouse. The paper uses data from other sources as methods used. It has made a lot references, like Journal of Economic Literature. National Tax Journal and so on. Some of the key findings of the quantitative research paper were: First, about 60% of the 35-40 age group chosen (Greatest Generation, Silent Generation) their income has been increased. Second, more than 70% children( the Boomers generation) from poor families tend to have a relatively high income distribution compare to their parents. Third, The current dominant age group is gradually being replaced by the younger generation, i.e., those that dominated the earlier generations such as the "Greatest Generation" and "Silent Generation" were gradually replaced by the “Boomer Generations”. One of the internal strengths of the research is that it demonstrates the Life-cycle effect importance such as the Boomers replacing the Greatest Generation and Silent Generation. Moreover it indicate the changes in the composition of the highest income groups, i.e., By 2010, the combined Baby Boom generations dominated the top 1, rising to a 59% share from 21% in 1987. Similarly, some of the internal weaknesses are that the research only make an assumption that individuals remain at the top of the income distribution table. Incomes can change due to life cycle effects and because of hard work or luck. Therefore, it cannot be assumed that the same individuals remain at the top of the income distribution from year to year.. In addition, one of the weaknesses is that the research only examines one period which is too limited, i.e. It only consider the Change in Real Income of Taxpayers from 1987 to 2007 One of the external strengths is that the research use large samples which make the results to be generalized, i.e., large data from the various sources was generalized that the high income earners in 1987 were replaced by another group by 2007. Moreover, the research provides a macro perspective of larger data. Data gathered shows large data from income distribution for all the generations for the period from 1987 to 2007. On the other hand, some of the external weaknesses are that the data are refer to some limited data. For instance, the data only utilizes data from only the tax payers but not the tax evaders. Besides, the research only answers the question of what and to what extent but not showing the reason and how. For instance, this research does not answers the question why and how the Greatest and Silent Generation were replaced by the Boomers Generation, it only shows that they were replaced and the extent that they were replaced. 2021/1/15 Why Inequality Matters - The Atlantic BUSINESS Inequality Matters Conservative commentators have been arguing that the uneven distribution of wealth and income in America isn’t a problem. ey’re wrong. JARED BERNSTEIN AND BEN SPIELBERG JUNE 5, 2015 DARREN STAPLES / REUTERS Lately, one argument that’s been making the rounds is that people should worry less about inequality and more about opportunity. Arthur Brooks, head of the conservative American Enterprise Institute, said, “I don’t care about income inequality per se; I care about opportunity inequality.” Senator and presidential candidate Marco Rubio believes that inequality is but a symptom of immobility and constrained opportunity. Tyler Cowen argued in the New York Times that what matters is not the fact that the top 1 percent is capturing a much larger share of total income growth than they used to, but that the poor are stuck in poverty. ese individuals have identi ed a worthy goal. Unequal access to opportunity offends deeply held American values, and poverty is not only a matter of near-term material deprivation—too often, it also robs low-income children of the chance to realize their intellectual and economic potential. https://www.theatlantic.com/business/archive/2015/06/what-matters-inequality-or-opportuniy/393272/ 1/9 2021/1/15 Why Inequality Matters - The Atlantic But it’s not possible to effectively address either poverty or inadequate opportunity if America hives off its opportunity concerns from the broader problem of inequality (nor, as Senator Rubio intimates, can America reduce inequality by focusing solely on increasing mobility). Boosting mobility will require reductions in wage, income, and wealth inequalities. For many in the opportunity-not-inequality camp, the relationship between the two concepts is an inconvenient truth. Concerns about inequality smack of “class warfare,” of “going after” the top 1 percent and Wall Street. Cowen is revealing in this regard: “e inequality focus tends to draw us to redistribution, whereas a mobility focus is more conducive to ideas for wealth creation.” Many politicians and analysts would rather not address the power imbalances that have channeled so much of our economic growth to the highest-income families. ey are much more comfortable focusing on the benign-sounding theme of “wealth creation” or insisting that economic growth alone can improve mobility without any redistribution of resources or political power, as if “a rising tide can lift all boats” matters when a few people are in yachts and many are stuck in dinghies. But a growing body of research shows strong links among inequality, poverty, and opportunity. For example, new research by Elise Gould of the Economic Policy Institute reveals that of the factors most commonly cited as driving poverty in America—education, family structure, race and more (see chart below)—the number-one factor by far is the growth in inequality, which added seven percentage points to the poverty rate since the late 1970s. https://www.theatlantic.com/business/archive/2015/06/what-matters-inequality-or-opportuniy/393272/ 2/9 2021/1/15 Why Inequality Matters - The Atlantic So why is that? How is it that inequality reduces mobility and deepens poverty? *** e relationship between childhood family income and life outcomes is wellestablished. Socioeconomic status is unfortunately the strongest predictor of a child’s academic achievement, as decades of social science research have found. A child’s income rank—her family’s income relative to the household income of other families—makes a difference for that child’s future adult-income rank as well. Research by Raj Chetty of Harvard and his colleagues links every 10-percentilepoint gain in childhood income rank with a 3.4-percentile-point gain in income rank as an adult. Since inequality by de nition means that less income will reach poor and middle class Americans for any given rate of economic growth, these facts alone highlight inequality’s relevance to mobility discussions. In addition, a large and growing body of evidence, recently reviewed by Katharine Bradbury and Robert Triest of the Federal Reserve Bank of Boston, directly connects inequality of outcomes to inequality of opportunity. As shown in the gure below, Bradbury and Triest nd a signi cant, negative relationship between living in an area with greater income inequality and children’s expected upward mobility. https://www.theatlantic.com/business/archive/2015/06/what-matters-inequality-or-opportuniy/393272/ 3/9 2021/1/15 Why Inequality Matters - The Atlantic e Relationship Between Inequality and Mobility Commuting zones with greater inequality have reduced expected upward mobility for low-income children (Center on Budget and Policy Priorities) It’s critical to understand the fundamental difference between these ndings and the Cowen, Rubio, et al. view that America can address poverty without addressing inequality. As just noted, rising inequality implies that the income and wealth generated by GDP and productivity growth increasingly ow to those at the very top of the scale. As a result, relatively fewer resources reach everyone else. One thus would expect to see low-income families less able (relative to the wealthy ones) to invest in children’s futures, more indebted if they tried to go to college, more likely to be stuck in neighborhoods that lack opportunity, and more likely to experience the stressors that do permanent damage to children’s later educational and earnings outcomes. And that’s exactly what happens. Research indicates at least three causal pathways via which inequality constrains opportunity for those at the lower end of the economic spectrum. https://www.theatlantic.com/business/archive/2015/06/what-matters-inequality-or-opportuniy/393272/ 4/9 2021/1/15 Why Inequality Matters - The Atlantic First, inequality is driving increasing residential segregation by income. e shares of families in neighborhoods of concentrated poverty and neighborhoods of concentrated wealth both more than doubled between 1970 and 2009, while the share of families in middle-income neighborhoods declined from 65 percent to 42 percent. ose high-poverty neighborhoods—where more and more families are living—create lasting disadvantages for many who grow up there: If a family with young children (less than age 13) relocates from a high- to a low-poverty neighborhood, the kids achieve better academic and economic outcomes later in life, as new work by Chetty et al. indicates. Second, inequality leads to unequal access to quality educational experiences throughout a child’s lifetime. Over the period of growing inequality, these disparities have increased. In 1995, for example, families with education debt in the bottom half of the net worth distribution (a broader de nition of income, including assets minus liabilities) had a mean debt-to-income ratio of around 0.26, meaning that for every dollar of their income, they owed 26 cents in college debt. For families in the top 5 percent, that ratio was eight cents on the dollar. But by 2013, the debt-to-income ratio had more than doubled to 0.58 for the bottom half (some of whom are poor but many of whom are middle class) while remaining unchanged for those at the top. ird, and most importantly, inequality directly undermines equality of opportunity, likely through a variety of mechanisms. As the gap between the rich and poor widens, lower-income families have less ability relative to their rich counterparts to invest in enrichment goods for their children. Children from families with less income have relatively less extensive and privileged social networks and, compared to their rich peers, are more likely to experience the type of "toxic" stress that can hamper brain development and long term academic, health, and economic outcomes. In short, inequality entrenches immobility not just by enabling increasingly unequal transfers of wealth from one generation to the next, but also through a number of more subtle pathways that affect opportunity on a daily basis. It may not yet be possible to explain all of these subtle pathways with great certainty, but the fact that “rich and poor children score very differently on school readiness tests before they enter kindergarten” should be viewed as an unsurprising consequence of the high levels of inequality American society currently tolerates. Members of the “don’t-mess-with-the-rich-to-help-the-poor” crowd also ignore the political dimension of inequality. While Rubio, Paul Ryan, and others are https://www.theatlantic.com/business/archive/2015/06/what-matters-inequality-or-opportuniy/393272/ 5/9 2021/1/15 Why Inequality Matters - The Atlantic professing their concern for the poor, they’re busy trying to repeal the estate tax (at a cost of $270 billion over 10 years) and writing budgets that gut the safety net. ese policies restrict mobility at both the bottom and top by exacerbating the burdens of being poor, increasing the privilege of being born into riches, and eliminating revenue sources for investments that might begin to reverse the inequality of opportunity. Why do politicians pursue such policies? Because they are nudged along by the interests of wealthy donors. Inequality begets greater inequality. In other words, disadvantages faced by children in low- and middle-income families and advantages held by their wealthy peers are two sides of the same coin. e lack of opportunity for those in poverty is not some separate problem from the unequal distribution of wealth and income across society. *** Boosting mobility therefore requires directly addressing residential segregation, educational access, and other barriers described above. Here are some ideas that hold promise: One conclusion that stems from the Chetty et al. ndings regarding the bene ts of moving from high- to low-poverty areas is to improve the Department of Housing and Urban Development’s Housing Choice Vouchers (HCV) program. Housing analysts Barbara Sard and Doug Rice recently detailed a number of speci c, straightforward changes that could eliminate barriers for voucher recipients to move into low-poverty areas, including tying voucher subsidies to rent in speci c zip codes instead of entire metropolitan areas. Importantly, such a change could be implemented without signi cant funding or even congressional action, and HUD has just announced that it is considering doing so. To balance the educational playing eld beginning at the starting gate, America needs a robust, publicly funded pre-K program. A 2013 proposal from the Center for American Progress that would make pre-school free for kids in low-income families and partially fund tuition for higher-income kids would be a good start, though at $10 billion a year, it’s not cheap. Still, research summarized by the Council of Economic Advisers suggests that the economic gains, higher tax revenues, and lower public costs from the children who would bene t from this investment would offset part of these costs in the long run. America also needs more equitable funding for K-12 education at both the federal and state levels. at means both funding increases—real overall state and local per https://www.theatlantic.com/business/archive/2015/06/what-matters-inequality-or-opportuniy/393272/ 6/9 2021/1/15 Why Inequality Matters - The Atlantic pupil funding has declined in 35 states since 2007—and changes in the distribution of funding, which is inequitable in part because of the reliance on local property tax revenue, and because of the political power that affluent communities have. Evidence also shows that college enrollment and completion can be boosted by providing students with relief from the rapidly-escalating costs of tuition and other school-related expenses. It is thus important to at the very least protect recent improvements in Pell grant awards and eligibility (which are under attack by Republican budgets), and to potentially consider more ambitious ideas for free college along the lines of what Bernie Sanders has proposed. While the above recommendations are important, growing up with less income signi cantly inhibits mobility even after taking educational access into account. As research by the Pew Economic Mobility Project indicates, children born into the bottom quintile who obtain a college degree are 2.5 times less likely to end up in the top quintile of the income distribution as adults than children who grew up in wealthy families but did not graduate college. In addition, changes to HUD’s voucher program, while extremely valuable for the roughly 250,000 children who could bene t in the near-term, do not get at the root causes of neighborhoods of concentrated disadvantage. Policies that directly address inequality and poverty by boosting the incomes of poor and middle-class families are essential for maximizing mobility. One proven way to do so is through safety-net programs like the Earned Income Tax Credit (EITC), Supplemental Nutrition Assistance Program (food stamps), and Medicaid. ese are redistributive programs (just as Cowen feared) and the added income they provide do not simply reduce poverty now: An important new line of quasi-experimental research on these programs also shows that they function as longer-term investments over children’s lifecycles. As summarized by Marr et al., research has suggested, for example, that “a $3,000 increase in family income (in 2005 dollars) between a child’s prenatal year and fth birthday is associated with an average 17 percent increase in annual earnings and an additional 135 hours of work when the children become adults, compared to similar children whose families did not receive the added income.” at evidence and similar evidence for food stamps and Medicaid reinforces the importance of maintaining and in many cases strengthening safety-net programs. In terms of the EITC, both President Obama and Representative Paul Ryan have recommended expanding the bene ts for childless workers, who currently receive very little of the credit. Key provisions of the EITC and the Child Tax Credit are https://www.theatlantic.com/business/archive/2015/06/what-matters-inequality-or-opportuniy/393272/ 7/9 2021/1/15 Why Inequality Matters - The Atlantic also set to expire in 2017, and these provisions should be made permanent as well. In addition, states that haven’t yet done so should adopt the Affordable Care Act’s Medicaid expansion, especially since the federal government shoulders almost all of the costs. SNAP should be expanded, too, as a recent estimate by the Urban Institute suggests that a 30 percent increase in SNAP bene ts “would reduce child poverty by 16 percent, lifting 1.8 million children out of poverty.” More progressive taxation of inheritances and returns of wealth (capital gains) would be sensible, just, inequality-reducing, and mobility-enhancing ways to nance such initiatives. Finally, since most working families depend on paychecks that have been hurt by diminished job quantity and quality, improving job-market outcomes for low- and moderate-income households is another essential strategy to offset the direct effects of inequality on opportunity. at means ideas like raising the minimum wage, protecting collective bargaining, and getting to full employment are integral parts of the effort to expand the opportunity set for kids of low- and middle-wage working parents. *** at inequality and immobility are intimately linked—and that we can’t effectively reduce the latter without also reducing the former—should not be surprising. As more of the bene ts of growth ow to a narrower slice of households at the top of the wealth scale, it becomes increasingly more challenging for the majority on the wrong side of the inequality divide to make the investments in themselves, their children, and their neighborhoods that can foster their mobility. Once political power is added to the mix—the established fact that the bene ciaries of high inequality are disproportionately in uencing public policy on their behalf—the opportunities for the middle class and poor to build better lives become even more limited. Attacking immobility means attacking inequality. To pretend otherwise will only preserve the unfairness that’s at the heart of the American economy today. We want to hear what you think about this article. Submit a letter to the editor or write to letters@theatlantic.com. https://www.theatlantic.com/business/archive/2015/06/what-matters-inequality-or-opportuniy/393272/ 8/9 2021/1/15 Why Inequality Matters - The Atlantic Make your inbox more interesting. Each weekday evening, get an overview of the day’s biggest news, along with fascinating ideas, images, and people. See more newsletters Enter your email Sign Up Ideas that matter. Since 1857. Subscribe and support 162 years of independent journalism. For less than $1 a week. 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