Absolute mobility

What Is Absolute Mobility?

Absolute mobility, a key concept in Socioeconomics, measures the extent to which individuals or households improve their financial well-being compared to a preceding generation, typically their parents. It quantifies whether children, as adults, achieve a higher standard of living or real income than their parents did at a similar age³⁸, ³⁹. Unlike other measures of mobility, absolute mobility focuses on the actual upward or downward movement in economic status rather than an individual's position within an income distribution. It provides insight into whether a society is collectively experiencing upward economic progress, often driven by overall economic growth.

History and Origin

The study of absolute mobility gained significant traction with researchers analyzing long-term trends in economic opportunity. Historically, the notion that each successive generation would attain a better economic standing than the last was a core component of narratives like the "American Dream"³⁶, ³⁷. Empirical research into absolute mobility became more feasible with advancements in data collection and statistical methods, particularly through the use of longitudinal studies and linked administrative data that track individuals and their families over decades³⁴, ³⁵.

A seminal study by economists Raj Chetty, Nathaniel Hendren, and co-authors, published in Science in 2017, provided detailed historical estimates of absolute mobility in the United States since 1940. Their work highlighted a significant decline in absolute mobility, showing that while approximately 90% of children born in 1940 earned more than their parents, this figure fell to about 50% for children born in the 1980s³¹, ³², ³³. This research, summarized in a column by the authors, spurred considerable discussion among policymakers and the public about the evolving nature of economic opportunity³⁰.

Key Takeaways

• Intergenerational Progress: Absolute mobility directly assesses whether the next generation is economically better off than the previous one, often focusing on income.
• Economic Growth Dependent: It is largely influenced by overall economic growth and how broadly that growth is shared across the population.
• Contrast to Relative Mobility: Unlike relative mobility, absolute mobility is not a zero-sum game; it can increase for everyone in an expanding economy.
• Policy Relevance: Trends in absolute mobility inform discussions about socioeconomic opportunity, income inequality, and the effectiveness of economic policy.
• Measurement Challenges: Accurate measurement requires long-term, linked data on parental and child income, adjusted for factors like inflation.

Measurement and Calculation

Absolute mobility is typically measured as the percentage or fraction of individuals who achieve a higher real income or standard of living than their parents did at a comparable age. This involves comparing the inflation-adjusted income of a child in adulthood to that of their parents when the parents were at a similar stage of life²⁸, ²⁹.

The calculation can be broadly represented as:

[
\text{Absolute Mobility Rate} = \frac{\text{Number of adult children with higher real income than parents}}{\text{Total number of parent-child pairs in the sample}} \times 100%
]

Where:

• Number of adult children with higher real income than parents: This is the count of individuals in the younger generation whose household income, adjusted for inflation (often using measures like the Consumer Price Index), surpasses that of their parents at a similar age.
• Total number of parent-child pairs in the sample: This represents the entire group of intergenerational comparisons being analyzed.

Researchers carefully define "income" (e.g., individual earnings, household income, pre-tax or post-tax) and "comparable age" to ensure consistency in measurement²⁶, ²⁷.

Interpreting Absolute Mobility

Interpreting absolute mobility involves understanding what the percentage signifies for a given society. A high absolute mobility rate suggests that a large proportion of the population is experiencing upward economic progress across generations. This is often indicative of robust Gross Domestic Product growth and broad-based prosperity, where the benefits of economic expansion are widely distributed²⁴, ²⁵.

Conversely, a declining or low absolute mobility rate signals that a smaller percentage of children are surpassing their parents economically. Such trends can raise concerns about stagnating living standards and the diminishing realization of economic opportunity for many. It suggests that economic growth, if present, may not be widely shared, or that societal conditions are not conducive to widespread generational improvement in wealth accumulation²², ²³. Analysts often examine absolute mobility rates in conjunction with other economic indicators to gain a comprehensive view of socioeconomic progress and challenges within a country²¹.

Hypothetical Example

Consider two families, the Johnsons and the Smiths, residing in the same town.

The Johnson Family:

• Parents' Income: When the Johnson parents were 35 years old, their combined household income was $60,000 per year (inflation-adjusted to current dollars).
• Child's Income: Their child, now also 35 years old, has a current household income of $75,000 per year.

In this case, the Johnson child has experienced upward absolute mobility, as their income ($75,000) is higher than their parents' income ($60,000) at a comparable age.

The Smith Family:

• Parents' Income: When the Smith parents were 35 years old, their combined household income was $80,000 per year (inflation-adjusted).
• Child's Income: Their child, now 35 years old, has a current household income of $70,000 per year.

Here, the Smith child has experienced downward absolute mobility, as their income ($70,000) is lower than their parents' income ($80,000).

If a study sample includes these two families, and they are representative, the absolute mobility rate would be calculated based on the proportion of children who exceed their parents' income. In this micro-example, one out of two children experienced upward absolute mobility, leading to a 50% absolute mobility rate for this tiny sample. This simplified scenario demonstrates how individual socioeconomic status changes across generations contribute to the aggregate measure of absolute mobility.

Practical Applications

Absolute mobility is a crucial metric for policymakers and economists when evaluating the health and equity of an economy. Its practical applications span various areas of economic policy and social analysis:

• Assessing Economic Progress: Governments and international organizations, such as the World Bank, use absolute mobility to gauge whether overall living standards are improving across generations²⁰. A sustained increase in absolute mobility indicates a thriving economy that offers widespread opportunities for advancement.
• Guiding Policy Interventions: When absolute mobility declines, it often signals structural issues within the economy, such as high income inequality or slow growth¹⁸, ¹⁹. This can prompt discussions on interventions aimed at fostering more inclusive growth, improving educational access, or strengthening social safety nets. The Federal Reserve Bank of Richmond, for example, explores how measures of income inequality and economic mobility inform public and policy attention¹⁷.
• Understanding the "American Dream": In the U.S. context, absolute mobility is closely linked to the aspirational "American Dream." Research on its trends, particularly studies indicating a significant decline since the mid-20th century, highlights challenges to this ideal and fuels debates about the future of opportunity¹⁵, ¹⁶.
• International Comparisons: By comparing absolute mobility rates across different countries, researchers can identify best practices and understand how varying economic systems and social structures impact intergenerational progress¹³, ¹⁴.

Limitations and Criticisms

While absolute mobility offers valuable insights into societal progress, it is not without limitations and criticisms.

One key criticism is that absolute mobility can sometimes mask underlying disparities, particularly for marginalized groups. Even if overall absolute mobility is positive due to general economic growth, certain demographic segments may experience stagnant or even declining real incomes relative to their parents, yet their struggles might be overshadowed by the aggregate upward trend¹¹, ¹². Research suggests that a focus on absolute mobility as a primary policy target might divert attention from the specific disadvantages faced by the most vulnerable children in a society¹⁰.

Another limitation stems from the data requirements. Measuring absolute mobility accurately necessitates high-quality, long-term, and linked intergenerational mobility data, which can be challenging to obtain. Adjusting for factors like inflation, changes in household income definitions, and demographic shifts over decades introduces methodological complexities and potential biases⁸, ⁹. Furthermore, simply earning more than one's parents does not always equate to a significantly better life, especially if the initial starting point was very low, or if the increased income is largely offset by rising costs of living and a decline in social capital or access to services. The measure may also be less sensitive to the impact of human capital investments compared to other mobility metrics.

Absolute Mobility vs. Relative Mobility

Absolute mobility and Relative mobility are two distinct, yet related, concepts used to measure economic or social advancement across generations. Understanding their differences is crucial for a complete picture of socioeconomic opportunity.

While a society might experience high absolute mobility due to strong economic growth that lifts all incomes, its relative mobility could remain low if individuals largely retain the same rank as their parents within the income spectrum. Conversely, a society could have high relative mobility (people frequently changing ranks) but low absolute mobility if the overall economy is stagnant, meaning individuals are merely reshuffling positions without significant overall improvement in living standards⁷.

FAQs

What does it mean if a country has high absolute mobility but low relative mobility?

This situation implies that while most people are experiencing an overall improvement in their real income or living standards compared to their parents (high absolute mobility), their relative position on the economic ladder might not be changing significantly. This often occurs in economies with strong economic growth that benefits most segments of society, but where the structure of income inequality remains relatively fixed.

Can absolute mobility decline even if the economy is growing?

Yes, absolute mobility can decline even with economic growth if the benefits of that growth are disproportionately concentrated at the top of the income distribution. If most of the increased wealth flows to a small percentage of the population, then a large segment of the middle and lower classes may not see their real incomes surpass those of their parents, leading to a decline in overall absolute mobility⁵, ⁶.

Why is absolute mobility important to understand?

Understanding absolute mobility is vital because it speaks directly to the broad progress of a society and the lived experience of its citizens. It indicates whether the promise of a better future for the next generation is being realized. When absolute mobility is low or declining, it can signal deeper issues related to economic opportunity, the distribution of wealth, and the effectiveness of existing economic policy in creating widespread prosperity.

What factors contribute to changes in absolute mobility?

The primary factors influencing changes in absolute mobility are the rate of overall economic growth and the distribution of that growth across different income levels³, ⁴. Higher, more broadly shared economic growth generally leads to higher absolute mobility. Other contributing factors include access to quality education, healthcare, social safety nets, and the prevalence of income inequality within a society.

How is absolute mobility measured over long periods?

Measuring absolute mobility over long periods, such as several decades, often involves complex statistical methods that combine data from various sources, including census records, tax data, and longitudinal surveys¹, ². Researchers compare the inflation-adjusted household income of adult children with that of their parents at a similar age. Adjustments are often made for factors like household size and the Consumer Price Index to ensure accurate comparisons over time.