Donald Trump is pushing ahead with his plan for cutting taxes on corporations and wealthy Americans.
But a new paper published by the National Bureau for Economic Research suggests America’s rich don’t particularly need the help.
The research explores the relationship between parents’ incomes and their children’s access to education and economic outcomes in life. The findings are rather striking.
“Access to colleges varies greatly by parent income,” writes Raj Chetty of Stanford University and four co-authors. “Children whose parents are in the top 1% of the income distribution are 77 times more likely to attend an Ivy League college than those whose parents are in the bottom income quintile.”
- Chetty et al
Chetty and his colleagues found that, despite the class disparity in admissions, both rich and poor students benefitted equally from their educations. Children from low- and high-income families that attended similarly-ranked colleges have similar earnings outcomes after graduation, “indicating that low-income students are not mismatched at selective colleges.”
Upward mobility, defined in the paper as the percentage of students who come from the bottom 20% and reach the top 20%, shows large differences between schools, the study says.
“Rates of bottom-to-top quintile mobility are highest at certain mid-tier public universities, such as the City University of New York and California State colleges. Rates of upper-tail (bottom quintile to top 1%) mobility are highest at elite colleges, such as Ivy League universities,” the study says.
This chart traces the relationship between children’s income ranks and parents’ income ranks for children born in 1980-82. Children’s incomes are then measured in 2014 and assigned percentiles based on their rank relative to other children from the same birth-year range.
The figures show mobility is a fairly rare privilege for an America that used to pride itself in providing conditions for its population to climb the social ladder, but that colleges matter. While there’s a fairly strong relationship overall between parent incomes and child incomes, at colleges like UC Berkeley and SUNY Stony Brook, students from all parts of the income spectrum tend to end up in more or less the same place after graduation.
- Chetty et. al. 2017