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Communities with a strong middle class whose families are dispersed throughout, might provide the best mix for raising successful children.
Monday, July 29, 2013
George Alexander Louis entered the world last week third in the line of succession for the British crown, his future assured.
Rare are the royal princes and princesses of the world who, if history holds, will have a financial care.
American parents continue to dream that their little princes and princesses will grow up to achieve more financially than they. They may wish to consider the results of a ground-breaking study. The chances of American children climbing the income ladder depends greatly on the community in which they are raised. And by community, it doesn’t matter so much whether it is urban, suburban or rural, but that it includes a strong middle class of engaged citizens.
The study released recently tracked the income mobility of the nation’s children who were born around 1980. The economists started on the quest to determine whether tax policies impact the ability of children of poorer families to climb the income ladder. (They do.) Rather than look at a freeze-frame of income inequality, as other studies have done, they tracked people’s paths over three decades.
In reviewing millions of earning records of parents and their children, now in their 30s, the researchers from Harvard and the University of California Berkely were surprised to find that where a child is raised contributes, more so than any other factors, to his future earnings potential.
Researchers then probed deeper to figure out why this might be, and they found four broad factors that appear to encourage income mobility: a high prevalence of two-parent households, good schools, engaged citizens and a strong middle class dispersed throughout neighborhoods. In communities where people are segregated by incomes, fewer children will rise above their income class.
The United States was divided into 741 “commuting” areas that are similar to metro areas but include rural areas as well. Children were assigned to a commuting area based on where they were living at the age of 16. Researchers found stark geographical differences, with the South faring the worst, as many of its cities remain segregated, not necessarily by race but by income.
A child who grows up in the Roanoke commuting area, which includes the New River Valley, with parents who earn in the 10th percentile (below $16,000) ends up, on average, in the 34th percentile. Which is far better than the deep South but still a couple percentage points below the national average.
The researchers are quick to point out that their findings are correlations, not causations, that other factors may be in play, but that their findings should prompt additional studies to dig deeper into data. The results should give policy makers much to consider.
For instance, the economists wrote in their summary, “We do find higher rates of upward income mobility in areas with high rates of economic growth over the past decade, but the vast majority of the difference in mobility across areas is unrelated to economic growth.”
Rather than pin hopes on a factory or major employer turning a community around, the question is reversed: Do engaged, diverse communities of mixed income, with a wealth of good schools and strong families, serve as incubators for business growth?
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