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The fading American dream: Trends in absolute income mobility since 1940

Rates of absolute mobility—the fraction of children who earn more than their parents—have fallen from approximately 90% for children born in 1940 to 50% for children born in the 1980s.

Increasing GDP growth rates alone cannot restore absolute mobility to the rates experienced by children born in the 1940s.

However, distributing current GDP growth more equally across income groups as in the 1940 birth cohort would reverse more than 70% of the decline in mobility.

These results imply that reviving the “American dream” of high rates of absolute mobility would require economic growth that is shared more broadly across the income distribution.

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