In 1940, nine out of ten American children earned more than their parents. In 1985, one out of two. This decline in absolute mobility was documented by Raj Chetty and his coauthors. Opportunity Insights, the research center he directs at Harvard, was created later to continue this analysis.
The Essential Points
- Upward mobility in the United States fell from 90% to 50% between the 1940 and 1985 cohorts, according to Opportunity Insights (Chetty et al.).
- For the 1980 cohort, the estimates are nearly identical: 53.1% in Utah and 53.2% in Louisiana; this study does not establish their causes.
- Black children, particularly black boys, experience on average lower upward mobility than white children, a disparity that aggregate growth does not explain.
- The study shows that more broadly distributed growth is associated, in its counterfactual simulations, with higher absolute mobility, without establishing direct confirmation of Simon Johnson’s institutional thesis.
- Restoring intermediate mobility between the 1940 and 1985 cohorts depends on specific institutional reforms, notably equalizing school tax funding and extending health coverage starting in early childhood.
Growth No Longer Lifts All Boats
The observed decline is primarily associated, in the study’s simulations, with a more unequal distribution of income growth. The study does not directly identify the institutions responsible.
The American promise rested on simple mechanics: each generation would do better than the previous one. This mechanics worked for three decades after World War II. The cohort born in 1940 experienced it fully: 90% of its members surpassed their parents’ income level, buoyed by growth that was widely distributed.
What happened next was less a sharp break than continuous erosion. The 1950 cohort maintained high mobility. The 1960 cohort began to slip. For the cohort born in 1980, average absolute mobility is estimated at roughly 50%. American growth itself did not disappear over this period: GDP continued to increase.
But its fruits became concentrated. Income growth was less widely distributed among income groups, which reduced absolute mobility.
Economist Raj Chetty, who directs Opportunity Insights at Harvard, measured this phenomenon cohort by cohort. His conclusion is clear-cut: the central problem of American mobility is not overall economic stagnation, but the distribution of growth. Children born in the 1980s were far less likely than those born in 1940 to earn more than their parents.
Utah Against Louisiana: A Lesson in Institutional Geography
One of the most striking findings of Opportunity Insights research is geographic. Intergenerational mobility varies notably from state to state, and even from county to county. For the 1980 cohort’s absolute mobility, Utah shows 53.1%, a level near the average for states rather than one of the highest. Louisiana is estimated at 53.2%, and does not rank among the least mobile states. For the 1980 cohort, Louisiana exceeds Utah by 0.1 percentage points (53.2% versus 53.1%).
Local characteristics are correlated with mobility, but their causal share is not entirely identified.
Two mechanisms dominate. The first is school taxation. In the United States, a large portion of public school funding relies on local property taxes. In states or counties where this logic is pushed to an extreme, children from poor neighborhoods attend under-funded schools, while children from affluent neighborhoods benefit from per-student budgets two to three times higher. Utah has adopted equalization mechanisms that mitigate this effect.
Louisiana has not.
The second mechanism is access to Medicaid during childhood. Studies on the impact of early health coverage show lasting effects on income trajectories in adulthood: better health, less school absenteeism, reduction of family financial shocks that cause children to fall behind. States that expanded Medicaid early and broadly produce more mobile cohorts. Some studies move beyond correlation to individual Medicaid effects, without establishing a causal effect on the aggregate mobility rate.
States present variable levels of absolute mobility, but the Louisiana-Utah comparison illustrates instead nearly identical levels. Research shows that places have causal effects and that certain local characteristics are associated with them, without causally hierarchizing policies, culture, and geography.
Race as a Revealer of Market Limits
Racial disparity in Opportunity Insights data adds a layer of information that national aggregates mask. Black children, especially black boys, have on average lower upward mobility than white children. This formulation deserves explanation: black children start lower in the income distribution, and their rate of surpassing their parents’ income remains below that of white children at equivalent starting positions.
This disparity does not disappear when controlling for parents’ education level or the household’s origin income. It resists standard economic variables. Reviewed studies associate gaps with differences in employment and wages, as well as certain local environments, without establishing the list of institutions advanced. Factors that depend on collective choices, not individual preferences.
Segregation is associated with mobility in geographic studies, but the racial gap persists even within the same neighborhoods. Differentiated wealth accumulation between black and white families, documented in a previous article in this journal, predates and conditions access to quality local institutions. Family wealth determines the neighborhood. The neighborhood determines the school. The school determines a substantial part of the trajectory.
Johnson’s Anticipations Confirmed by Data
In his 2025 Nobel Lecture, Simon Johnson formalizes a thesis that his work with Daron Acemoglu has built for twenty years: inclusive institutions, those that distribute power and resources widely, determine who captures the gains from growth and technology. Extractive institutions may allow elites to extract resources, but their effects depend on institutional and economic context.
These data are compatible with an institutional interpretation, but do not constitute a direct empirical test of this thesis. Aggregate growth did not falter between 1970 and 2024. Institutions were lacking to distribute its fruits more broadly among income groups. School dependence on local revenues reproduces birth advantages rather than correcting them. Universal access to Medicaid from childhood creates a common foundation independent of birthplace.
This framework enters into tension with a classical liberal reading that would prefer to see in the decline of mobility the result of regulatory rigidities or tax distortions hampering growth. Tyler Cowen, for example, long insisted on productivity stagnation as the primary cause of trajectory inequality. The reading is coherent: if growth slows, fewer gains to distribute. But Opportunity Insights’s geographic data weaken this explanation. Nearby American counties, subject to the same national economic cycles, display considerable mobility gaps.
Institutional and social local characteristics are correlated with mobility, without proof that they causally explain the gaps alone.
The two readings do not entirely exclude each other. Stronger growth would produce more to distribute. But without reform of the institutions that distribute, stronger growth could simply accelerate concentration at the top. This is precisely Johnson’s argument: technology and growth are not neutral by nature; their social impact depends on the institutions that frame them. The question of regulating before adopting arises here in its most concrete form: school and health institutions must be reformed before the gains from progress redistribute themselves.
The Diploma Is No Longer Enough Where Schools Are Unequal
For a long time, the standard answer to declining mobility was education. Go to university, get a diploma, and upward trajectory will follow. This prescription remains partially true on average. It masks a harder reality: the quality of access to education varies so much by birthplace that it reproduces inequality rather than correcting it.
A child born in a county with low property tax revenue, in a family without wealth, will attend an under-resourced public school. He will enter high school with accumulated gaps. His access to university will be conditioned by his ability to finance studies in a system where tuition has grown far faster than median incomes. And if he does access it, the professional network he finds there will be less dense than that of his peers from more selective schools.
The Archbridge Institute, in its comparative studies on social mobility, documents what researchers call the place effect: at equivalent diploma level, income trajectories diverge by county of origin. The diploma partially levels the inequality of starting conditions. Local institutions and environments can influence mobility, among several mechanisms that remain partly unidentified. Where institutions are weak, the diploma remains necessary but insufficient.
This finding has a direct implication for the introduction of AI in classrooms: if digital educational tools are rolled out against a backdrop of uncorrected institutional inequality, they risk accelerating trajectories of the better endowed without improving those of the most precarious. Technology amplifies existing institutions; it does not replace them.
Can We Restore Mobility to 70% Before 2050
Raising mobility could pass through reform of local institutions. School equalization and early health coverage are two interventions associated in the literature with higher mobility.
Two levers dominate in available literature. The first is equalization of school tax funding. Several states have undertaken reforms in this direction since the 1990s, sometimes under judicial constraint. Available data on states that reformed their school financing systems show measurable improvements in mobility in following cohorts. The effect takes a generation to manifest, but it is documented.
The second lever is extension of health coverage from conception and during early childhood. The effects of childhood Medicaid on health and certain long-term economic outcomes are documented, but vary by outcome and group. Targeted expansion of Medicaid during the prenatal period and first year of life is associated with limited improvement in mobility for children from poor families; effects vary by outcome and group.
These two reforms share a characteristic: they cost in the short term and pay in the long term. This time lag creates a well-known political problem. The voters who finance the reforms are not those who will benefit. Political mandates of two to four years do not align with effects measured over twenty to thirty years. This is one reason why states with high institutional inequality have resisted reforms: not from ignorance of data, but from the structure of political incentives.
A third lever, more recent in literature, concerns universal pre-school investment. Studies on programs like Head Start in the United States, or equivalents in Northern Europe, show positive effects on cognitive and social trajectories of children from disadvantaged backgrounds. But results are sensitive to program quality: formal access without sufficient funding produces little effect. Quality costs, which returns to the local tax problem.
Simulations show that distribution of growth comparable to 1940 would substantially increase absolute mobility, without attributing this result to specific coordinated institutional reforms. These reforms include equalization of school funding, extension of early health coverage, and strengthening of pre-school programs in low-mobility regions. None of these conditions are assured. Each is politically contested. But each has documented precedents, states that have attempted it, whose effects can be measured.
Absent reform, intergenerational mobility could remain close to current levels. Mobility disparities between states could widen and family origin would remain associated with income trajectories. The longitudinal measurement instruments that Opportunity Insights developed—cohort data crossed with tax records over several decades—will allow testing these trajectories in near real-time. This is one of the major methodological advances of the past twenty years: recent administrative data allow estimating with high precision the effects of certain reforms and certain local environments on mobility.
What local institution, reformed in 2026, would produce more mobile cohorts in 2045? The data exist to answer. The question remaining open is whether the political systems of the states concerned are capable of committing to a timeframe so long.
Sources
- Opportunity Insights (Chetty et al.), longitudinal data on intergenerational mobility in the United States: https://opportunityinsights.org/
- Simon Johnson, Nobel Lecture: Institutions, Technology, and Prosperity, American Economic Review, 2025: https://www.aeaweb.org/articles?id=10.1257/aer.115.6.1709
- Raj Chetty et al., Race and Economic Opportunity in the United States, Opportunity Insights / Census Bureau CES Working Paper, 2024, available on opportunityinsights.org
- Archbridge Institute, comparative studies on social mobility in the United States: archbridgeinstitute.org
- Studies on the impact of Medicaid on income trajectories in adulthood, National Bureau of Economic Research (NBER), multiple authors, 2018-2024
