III Education and Opportunity

Gates, Gaps, and Intergenerational Mobility: The Importance of an Even Start

Timothy M. (Tim) Smeeding

Abstract This chapter focuses on how intergenerational mobility is affected by children's earliest life experiences from conception through preschool. These experiences are important because of their effects on outcomes later in life. One consequence is that intervening early is the most cost-effective way to put a child on course to pass through the gates that determine adult success and thereby reduce differences in mobility among children born in different circumstances. Using a life-cycle model, we examine the evidence on trends in factors that affect child development. The evidence we assess leads to the conclusion that opportunity and mobility are declining for lower and even middle class children as changes in family life, parenting practices, economic inequality, unresponsive social institutions, and increasingly economically homogeneous neighborhoods all point to a serious decline in the factors that are associated with greater mobility. We conclude that the decline in opportunity and mobility for current generations of American children is likely the biggest negative effect of the continuing U.S. inequality boom in income, wealth, and consumption. The paper ends by outlining a series of policies that would help restore opportunity in America by intervening early in the life course.

Keywords Intergenerational mobility (IGM) • Dynamic complementarity • Economic opportunity • Childhood outcomes • Human capital • Life-cycle model • Early childhood education • Childcare • Maternal health • Health care • Health insurance • Socioeconomic status (SES) • Unmarried mothers

Introduction: How Can We Make the Start More Even?

Efforts to address economic opportunity are not enough as we seek to improve American society. That's because addressing economic opportunity does not deal with another problem: a lack of intergenerational mobility (IGM). Without more widespread opportunities to improve childhood outcomes and do a better job of building human capital for all children, we are not likely to see a systematic increase in relative social and economic intergenerational mobility—movement up (or down) in socioeconomic class within a family from one generation to the next (see, for instance, Jencks and Tach 2006; Smeeding 2015).

Policy makers concerned about IGM need to think about how to overcome barriers in order to create more opportunity for those left behind and how to make greater opportunity translate into more mobility. In the parlance of the Opportunity in America project, we need to open more gates to opportunity for more children. And we need to reduce the gaps in successful outcomes between the children of the haves and have-nots, with the latter passing through key transition points with positive momentum instead of confronting closed gates at each point, falling further and further behind.

To guide our analysis, we need a framework to map out progress in reducing barriers that inhibit equalizing opportunity and IGM. The traditional literature on IGM does not help us much in this task. Most scholarly discussions of IGM focus on the question of income mobility for children once they have reached adulthood. Some of these studies tell us overall mobility has not declined in recent decades, which is unsurprising for an economy where income gains were widespread and living standards rose across the distribution up until the early 1980s (compare Mazumder 2015 and Smeeding 2015 with Chetty et al. 2014). We also know from national and crossnational research that there is substantial “stickiness” at both the top and bottom of the U.S. IGM matrix of parental and child incomes, with about 35–40 % of children that start in families at the top or the bottom of the heap ending up there as adults (Jäntti et al. 2006). Finally, we know that the resource levels separating the poor from the rich have grown in magnitude since the inequality generation was born in the 1980s, meaning that even with constant mobility, the consequences of ending up at one end or the other of the adult outcome distribution are much greater now because the dispersion in outcomes is much wider due to growing inequality in income and wealth.

If we are to advocate for policies to enhance opportunity and improve IGM for the next generation, we need to look at the factors affecting today's and tomorrow's children's chances at upward mobility, both in a relative and an absolute sense. A life-cycle approach begins to do this by setting up markers of success along the road to greater IGM from conception onward. By viewing IGM from this perspective, we are able to observe factors that increase or decrease equality of opportunity and mobility, and therefore, those that affect gates and gaps. These include both policies and institutions that open or close gates, and actions and choices made by individuals that either help to reduce opportunity gaps for themselves and their children or have the opposite effect—to widen them.

In this chapter, I focus on just a few steps along this continuum but the ones that I believe are the most important—those earliest in life. Increasingly, scientific evidence on child development and success focuses on the very earliest developmental periods (Aizer and Currie 2014; Mazumder et al. 2010). Thus we argue that worrying about a child's chances of success in life by starting with preschool is not starting too early but rather at least two or three steps too late. Indeed preschool is the final step along the life cycle that we address in this chapter.

We begin by asking what makes a difference early in life. We consider just a sample of the evidence on child differences by social and economic origin that is accumulating in all social and behavioral science fields, as well as the brain sciences. We then review recent changes in the five most important factors that propel or hinder progress at early (and later) life stages: family structure and stability; parenting practices; economic inequality; social institutions; and neighborhoods and the role of place. These factors interact with one another and together strongly influence both opportunity and mobility. We also discuss how these dynamics will be playing out in a very different world, one in which there is no racial or ethnic majority but ever-larger numbers of children of color. [1]

The goal is to produce a healthy, active, curious, happy, and engaged child for the first day of elementary school. With this in mind we examine how children are affected by these forces in three early life stages: prenatal and family birth status; early home life, health, and childcare during ages 6 months to 3 or 4 years; and family life, neighborhood, and preschool during ages 4–6. Evidently, there are large gaps in outcomes related to school readiness that are systematically linked to the contextual factors listed above. In particular, we need to determine if the gap between the top and bottom of the child well-being distribution has narrowed or widened along this path. Finally, we will conclude with some suggestions on policy levers that can increase the chances of success for children born to disadvantage.

Throughout the chapter, we must ask what the “proper” roles of government are and society is in this process. How might we target public investment in children's (and in some cases their parents') development—in their education, health, safety, and so on—to compensate for lower private investment and less capable parenting? Resources can play a significant role at strategic transition points in the life cycle (i.e., places where more investment on the part of parents or institutions can make a big difference in children's outcomes). Some come early and are addressed here, such as parent-child interactions and the development of cognitive skills and character (grit, social competency, perseverance, and good habits), while others come later in life. The latter include schooling choices, paying for college, providing funding to enable acceptance of an unpaid internship, direct job provision in family firms (nepotism), or helping a first entrance into the housing market. But in all cases, disparities in child outcomes appear at the earliest stages of life. And there is ever mounting evidence that the early childhood period, when the brain is most malleable, is the time where interventions for at-risk children might be most cost-effective (Heckman and Mosso 2014).

The scope of this investigation includes not only the poor but also the lower middle class. Stagnant earnings and flat or falling incomes, such as those that most workers are now experiencing, suggest that the barriers we identify are a worry for strapped middle classes, not just poor families with children (Shapiro 2015). There is a need for wages and incomes to rise in real terms for those now in the middle class. There is a difference between making a life on a poverty budget that provides just enough to barely shelter, feed, and clothe one's children, and one that is based on a budget sufficient to support a “well raised” child. In this regard, the important issue of the split in these costs between parents/families and the public sector and even the private sector arises. [2] Hence mobility is an issue for middle class families, not just the poor.

The present study is not simply an academic one: Opportunity and social mobility are growing popular and political issues. The belief in the opportunity to reach the American Dream is being seriously questioned today. [3] It once was a strongly and widely held view that if you worked hard and played by the rules, you could get ahead in America. But that has changed. Today, only 42 % of Americans agree that if you work hard, you'll get ahead, while just less than half (48 %) believe that was once but no longer true. Also notably, less than one-third of Black Americans believe that hard work gets you ahead, while one-seventh never believed this was true. Indeed, flat incomes indicate hard work and recovery from the Great Recession have not yet paid off for the middle classes.

More to the point for IGM analysis, most Americans (55 %) believe that one of the biggest problems in the country is that not everyone is given an equal chance to succeed in life. And according to Galston (2014), other recent surveys have shown the same result— parents' confidence in their children being better off than they are is at or near the lowest point ever recorded:

(W)hen the August 2014 NBC/WSJ poll asked “Do you feel confident or not confident that life for our children's generation will be better than it has been for us?”, only 21 percent expressed confidence, down from 30 % in 2012. During the same month, the CBS poll asked, “Do you think the future of the next generation of your family will be better, worse, or about the same as your life today?”, only 23 % responded “better” compared to fully 50 % who said “worse.”

In June, CNN/ORC found that only 34 % of respondents believed that most children would grow up to be better off than their parents, while 63 % expected the children to be worse off. And the Heldrich Center at Rutgers' Bloustein School found in August that only 16 % of Americans expect job, career, and employment opportunities to be better for the next generation than for the current generation, compared with 40 % in November of 2009, just months after the official end of the Great Recession (Galston 2014).

And families are not just imagining retrenchment, they are living it. A recent Brookings Institution report (Shapiro 2015) notes that in 2000, 16 % of households were headed by people without high school diplomas, and an additional 51 % were headed by people without college degrees. From 2002 to 2012, the median income of the group without high school diplomas declined at an average annual rate of 2.4 % across age cohorts year after year; the median income of the group without college degrees fell at an average annual rate of 1 % across age cohorts year after year. That tells us that two-thirds of American households have suffered persistent income losses from 2002 to 2012, a period that included eight years of economic “expansion” and two years of serious recession.

Overall then, it appears that most Americans express significant concerns about the economic future of their children and themselves. But they also are questioning their beliefs in America being an equal opportunity society, a principle widely thought by many to be our highest social value. [4] Restoring opportunity in America has to become an important and continuing national priority.

  • [1] See, for instance, Frey 2014 and the section entitled “The 5 Big Factors That Determine Early Development.”
  • [2] Kirkegaard (2015) suggests that public finance support for U.S. children is amassed mainly in the tax code and therefore supports rich children much more than poor ones. Absent changes in federal funding to favored new investment in children, new methods to pay must be found. The new institution of Social Impact Bonds (SIBs), where the public sector pays back private investments in outcomes that reduce future public costs, might help in such instances. For more, see Liebman (2011) and Costa (2014).
  • [3] Data collected in July and August 2014; Jones et al. 2014.
  • [4] “[Only] in America is equality of opportunity a virtual national religion, reconciling individual liberty—the freedom to get ahead and 'make something of yourself'—with societal equality. It is a philosophy of egalitarian individualism. The measure of American equality is not the income gap between the poor and the rich, but the chance to trade places” Reeves (2014).
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