We’ve all heard of the economic ladder, but what exactly makes it easier (or harder) to climb to a higher rung? For over a decade, Harvard University economist Raj Chetty and a team of researchers have been investigating that question. And they found a potential answer in parental employment rates.
In a recent study, the researchers determined that children’s odds of upward economic mobility improved when they grew up in a neighborhood where more adults have jobs. Those adults didn’t have to be in their immediate family; if a child’s parents didn’t work, their chances at success still improved if their peers’ parents worked. The findings were based on data on 57 million American children living across the country from 1978-1992.
“Growing up in a community where employment rates are higher for people in your race and class — if those employment rates are higher, the kids who grew up in those environments do better in the long run,” Chetty told The Wall Street Journal.
Kids who moved at an earlier age to communities with increasing parental employment rates saw a larger effect than those who moved later in their childhood, and social interaction with job-holding adults in their social circles seems to play a substantial role in their future economic standing.
“Children’s outcomes are most strongly related to the parental employment rates of peers they are more likely to interact with, such as those in their own birth cohort, suggesting that the relationship between children’s outcomes and parental employment rates is mediated by social interaction,” the authors wrote in the study.
Employment isn’t the deciding factor to financial growth, though, Chetty pointed out to WSJ, noting that changes in marriage and mortality rates are also correlated with mobility trends. But parental employment rates may serve as a kind of proxy for whether a community is thriving.
“The payoff to employment can be quite fundamental,” said Stanford University sociologist David Grusky, who was not involved in the work but reviewed the study. “Obviously it brings income into the community, but it also has implications for what people think about their prospects. It changes how they approach the world.”
Ultimately, the research offers a hopeful outlook on a deep-seated and ongoing concern: that social and economic standing is a life sentence, for better or for worse. The data showed that in the 15-year span, Black children at all parental income levels saw an increase in earnings, contributing to a shrinking gap between low-income white and Black children.
“These differences in opportunity by race, by class, by area that people have been worried about for decades — you might have had the view that this is never going to change because it’s driven by longstanding factors,” Chetty stressed. “That’s not true.”
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