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The Fading American Dream
Report

The Fading American Dream

Trends in Absolute Income Mobility Since 1940

NBER, 2016

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Editorial Rating

9

Qualities

  • Analytical
  • Eye Opening
  • Hot Topic

Recommendation

A 1928 US presidential campaign once tried to quantify the American Dream: “A chicken in every pot and a car in every backyard.” Yet the concept rests on an underlying fundamental “ideal that children have a higher standard of living than their parents.” In this robust and thought-provoking study, a team of researchers analyzes historical data to see how income mobility has changed for Americans born between 1940 and 1984. getAbstract recommends this groundbreaking report to those asking if the US economy is delivering on its promise.

Take-Aways

  • The American Dream has always represented an advancing economy, delivering growing prosperity for citizens from one generation to the next.
  • Economists denote this concept as “absolute income mobility – the fraction of children earning or consuming more than their parents.” 
  • A study of historical data reveals that absolute income mobility dropped from 92% for those born in 1940 to 50% for those born in 1984. 

About the Authors

Raj Chetty and Nathaniel Hendren are professors at Harvard University. David Grusky is a professor at Stanford University. Maximilian HellRobert Manduca and Jimmy Narang are PhD students.


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