What Helps People Climb the Income Ladder? It’s Surprisingly Hard to Say.

With the 2024 election cycle heating up and “Bidenomics” taking center stage, talk of income inequality—always a hot-button electoral issue—is back in the news.

Academics are caught in the fray. A debate has now emerged within academia about measurements of income inequality. A dire narrative popularized by Thomas Piketty, Emmanuel Saez, and Gabriel Zucman, who argue inequality has exploded, has been influential in recent years. Now a new paper by economists Gerald Auten and David Splinter highlights discrepancies between their outlook on inequality measurements, which show inequality to be less pervasive in the United States.

Similar debates surround the issue of social mobility. Some studies showing income mobility has steadily declined in the U.S. since the 1940s, while other work reveals more stagnation than anything else. Either way, the picture is not rosy for Americans.

Before we can agree on solutions, we first need to agree on the problem, and its root causes. Measurement of inequality or mobility is not enough. Instead, let’s ask the question: What influences mobility?

The research on root causes is stunningly scarce. As a result, there is no broad consensus on the main barriers or leading indicators of upward social mobility. To address this missing link, we have produced a first-of-its-kind index, titled “Social Mobility in the 50 States.” While others have measured income-based social mobility, our index explains how to improve the environment for social mobility in the U.S. The four key pillars are entrepreneurship and economic growth; the rule of law and institutions; education and skills development; and social capital.

Continue reading at Barron’s.