In the United States, intergenerational mobility has declined since 1980. According to work by Raj Chetty, Matthew O. Jackson and their co-authors published in 2022, higher cross-class connections could narrow approximately 37% of a given adult income gap. Education alone does not explain this mobility.
The Essentials
- Social capital is associated with intergenerational mobility, but figures of 40% and less than 20% attributed respectively to social capital and education do not correspond to causal decompositions established by available sources.
- The Chicago Fed studies intergenerational links in income, consumption and housing; it does not establish that property inheritance exceeds parental income as a predictor of mobility.
- Increasing access to diplomas may not be sufficient on its own to reduce mobility inequality; housing policies and access to opportunity neighborhoods may constitute relevant complements.
- Certain local land use regulations can constrain housing supply and contribute to high prices, whereas more abundant supply could improve housing access.
- Avenues exist: zoning reform, residential mobility programs, targeted social capital policies. But they require touching well-defended rents.
The Diploma, a Stalled Engine of the American Promise
The Chicago Fed identifies housing, wealth, and parental income as factors linked to economic mobility. Childhood neighborhood and higher education constitute two important determinants of intergenerational mobility.
The idea was simple and beautiful: expanding access to higher education could improve social mobility. The rise in higher education has coexisted with a decline in absolute mobility since the cohort born in 1940; it therefore does not on its own demonstrate a sustainable equation between diplomas and mobility. A child born in the poorest fifth of the income distribution had, in the 1940s and 1950s, a real probability of reaching the middle or top of the ladder in adulthood. Data from Chetty and his co-authors, compiled across millions of tax records, show a sharp decline in absolute mobility, while relative mobility remained approximately stable between cohorts born from 1971 to 1984. A child born in 1980 is twice as unlikely to exceed their parents’ income as a child born in 1940.
Higher education, meanwhile, has progressed. The rate of university diploma attainment more than doubled in fifty years in the United States. The increase in educational level does not exhaust the determinants of economic mobility. The diploma is associated with higher incomes on average, but its effects depend on fields of study, the labor market, family resources, and local contexts.
The question then becomes what is blocking progress. And the answers that recent data provide are even more uncomfortable than the observation itself.
The Neighborhood as Destiny, the Network as Invisible Capital
Raj Chetty and Matthew Jackson have mapped the United States at the county scale. Their conclusion: where you grow up determines your access to the economic networks that build careers. Where middle and upper classes mix with working classes, mobility rises. Where residential segregation is strong, and it is in nearly all major American metropolitan areas, the transmission of social capital stops at the neighborhood boundary.
This social capital is invisible in official statistics. It appears neither in reported incomes nor in years of education. It can facilitate access to an internship, a letter of recommendation, or an alumni network. Local environments and interactions between social groups are associated with differences in mobility. Geographic segregation can limit cross-class interactions without necessarily eliminating them.
The Chicago Fed adds a further dimension: intergenerational links between income, consumption, and housing. San Francisco, New York, Boston, and Seattle show strong disparities in housing and opportunity. Family home ownership can contribute to resources transmitted between generations, among other factors. Residing within a school district’s boundaries can provide access to its public schools; ownership is generally not a necessary legal condition. Family home ownership can contribute to resources transmitted between generations, among other factors.
Organized Scarcity, or How Housing Markets Block the Elevator
This is where the diagnosis Ezra Klein has been developing for several years in his work for The Atlantic and in the exchanges he has gathered around his abundance agenda comes in: certain public policies can limit housing supply. The motivations and effects vary by jurisdiction.
The mechanism is well documented in major American and Canadian cities. Certain local land use regulations can constrain housing supply and contribute to high prices, thereby limiting low-income households’ access to certain high-demand neighborhoods. You can only enter if you can buy or rent at prices that modest households cannot afford. The city of Toronto experienced a real estate price increase of more than 150% between 2010 and 2022, according to Statistics Canada data. Supply increased, but analyses can conclude that it is insufficient relative to demand, household formation, and affordability.
Vancouver presents a similar profile.
Property owners’ interests can contribute to supply restrictions; they do not alone explain price levels.
The result is a geographic lock on mobility. Financial constraints, housing policies, and segregation can limit modest households’ access to neighborhoods offering more resources and opportunities; these characteristics are associated with better outcomes, without establishing the entirety of this causal chain. A diploma does not physically move its holder. Moving to neighborhoods with more opportunity can improve children’s outcomes, particularly when it occurs early.
The Reading of Institutional Economists
Klein’s abundance agenda has convinced supporters. It also has serious critics, coming from a different tradition, that of institutional economists. Certain development policies can lead to gentrification or displacement if they do not protect vulnerable households; this conclusion cannot be attributed as such to Dani Rodrik or Joseph Stiglitz.
The argument deserves to be taken seriously. In cities that have relaxed their zoning, Minneapolis, Auckland, certain Paris neighborhoods, the effects on prices took time to materialize, and the most fragile households were sometimes displaced before the benefits of new supply diffused. Housing construction in a high-demand area tends to first attract intermediate and high-income households, not the modest-income households who need it most.
The tension between these two readings is real. Housing is a strategic good for mobility, and the effects of supply and household support policies vary by context. The determinism of local infrastructure on professional trajectories is documented in other domains: housing follows the same logic.
What Works, and Why It’s Difficult to Generalize
Programs exist that attempt to reduce the effects of place of residence. The Moving to Opportunity program, conducted by the U.S. Department of Housing in the 1990s, was studied for its long-term effects approximately two decades after its launch, notably through tax administrative data. These studies show that children displaced to lower-poverty areas before age thirteen achieved significantly higher incomes in adulthood; this result does not uniformly hold for children displaced at a more advanced age. For children displaced after age 13, the study finds estimated negative effects rather than a null effect. The neighborhood can shape trajectories from childhood.
These results have fed voucher-based mobility programs in several states. Maryland, Illinois, and Massachusetts have developed mechanisms that subsidize rent for modest-income families in high-opportunity areas. Initial evaluations are encouraging on children’s school outcomes, less conclusive on the long-term impact on incomes.
In Canada, affordable housing policies have notably supported social housing construction in peripheral areas. Their effect on access to economic networks in city centers depends on the projects and territories. Several municipalities, including Vancouver and Toronto, announced zoning reforms in 2023 and 2024, under provincial pressure. Their effects on prices and the social composition of neighborhoods are not yet measurable.
The political difficulty is real. Some property owners may support development restrictions to protect the perceived value of their property. Zoning reforms can encounter local opposition. Klein himself acknowledges that the abundance agenda runs into deep institutional blockages. Construction can be subject to multiple rules, competent authorities, and local appeal channels; the existence of individual veto is not universal.
Toward 2030: Three Variables for Restored or Lost Mobility
The trajectory depends on several variables that current data allows us to identify. We cannot predict with certainty how these variables will evolve, but the data allows us to establish conditional projections based on observed trends and assumptions.
The first is zoning reform at the metropolitan scale. If U.S. states and Canadian provinces maintain pressure on municipalities to densify high-opportunity areas, one can envision a decline in relative prices in these areas over a ten to fifteen year horizon. The effect on social mobility would be gradual and unevenly distributed; families that can move would benefit, not those lacking either the means or the information to do so.
The second is the evolution of remote work. If high value-added jobs remain partially relocatable, the geography of opportunities could rebalance without families having to migrate to the most expensive metropolises. Signals in this direction exist; some mid-sized Midwest American cities have seen their attractiveness increase since 2020. But the trend toward return to office work in major technology and financial firms limits this effect.
The third, more structural, is targeted social capital policy. Programs like Chetty’s Opportunity Insights, which maps economic opportunities at the neighborhood scale and helps families choose their residential destinations with full information, represent a concrete avenue. The mechanism is still marginal in volume. Its scaling would suppose sustained federal funding and coordination with local housing policies, two conditions that suppose a political will that current electoral data do not guarantee.
The constraint of access to initial capital as a barrier to mobility constitutes one factor among others in these three trajectories. The data suggest that educational policies can be complemented by housing, income, and access to opportunity neighborhoods policies, since education alone does not explain all mobility.
The data suggest that housing, residential mobility, and social connections are linked; their mutual reinforcement must be demonstrated program by program. American and Canadian political institutions can address them in distinct frameworks. A political coalition capable of addressing these three levers simultaneously remains to be built.
Sources
- Washington Center for Equitable Growth, U.S. Economic Mobility: Trends and Outcomes : https://equitablegrowth.org/research-paper/u-s-economic-mobility-trends-and-outcomes-a-research-update/
- Federal Reserve Bank of Chicago, Research on Intergenerational Economic Mobility : https://www.chicagofed.org/research/content-areas/mobility/intergenerational-economic-mobility
- Ezra Klein, The Atlantic & The Ezra Klein Show, Why We Need an Abundance Agenda : https://www.theatlantic.com/author/ezra-klein/
- Raj Chetty & Matthew Jackson, work on social capital and intergenerational mobility, Opportunity Insights (Harvard)
- Statistics Canada, data on real estate prices in Toronto and Vancouver, 2010-2022
- U.S. Department of Housing and Urban Development, evaluation of the Moving to Opportunity program
