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AEI ECONOMIC STUDIES 

FOSTERING UPWARD 

ECONOMIC MOBILITY 

IN THE UNITED STATES 

APARNA MATHUR AND ABBY MCCLOSKEY 

March 2014 

A M E R I C A N E N T E R P R I S E I N S T I T U T E

AEI Economic Studies 

Fostering Upward Economic 

Mobility in the United States 

By Aparna Mathur and Abby McCloskey 

March 2014 

A M E R I C A N E N T E R P R I S E I N S T I T U T E

Executive Summary 

While the national conversation continues to 

focus on income inequality and the minimum 

wage, the level of opportunity for economic 

mobility in the United States is astonishingly low. 

In a recent paper, Harvard University economist Raj 

Chetty and his colleagues find that upward mobility 

in the United States has stagnated in recent decades, 

despite periods of economic growth and an expansion 

of welfare programs. Another study found that 

70 percent of Americans born into the bottom two 

quintiles will not make it to the middle class. Other 

developed nations offer more opportunity and mobility 

than the United States. 1 

In this paper, we review the literature on the state 

of intergenerational mobility in America. Most studies 

find that a parent’s level of income is a significant 

determinant in a child’s income level. The causes for 

persistence identified by the literature include (1) 

segregation, (2) income inequality labor market challenges, 

(3) welfare programs, (4) education, and (5) 

family structure. We provide policy proposals in each 

of these areas. 

Segregation and geography are important factors 

in mobility because low-income households living in 

insolation no longer have the benefit of interaction 

with good peer groups. There are various approaches 

to overcoming segregation, such as encouraging the 

in-migration of richer households into poorer areas 

or improving public transit routes into poor areas. 

We propose building the human capital of disadvantaged 

city residents through a greater degree of 

school choice, which has been shown to counteract 

many neighborhood disadvantages. 

Having a job is the surest way out of poverty. 

There is an immediate need to encourage more 

participation in the labor force following the Great 

Recession. We propose experimenting with a wide 

variety of policies to encourage employment, such 

as work-sharing arrangements, relocation vouchers 

for those in hard-hit communities, and customized 

job-training programs with employers. 

Welfare programs that incentivize work have been 

far more successful in boosting incomes and mobility 

than simple cash assistance programs. The US 

Census Bureau estimates that the earned income tax 

credit (EITC) lifted 5.4 million people out of poverty 

in 2010 alone. 2 We propose expanding the EITC 

to childless adults, reducing the marriage penalty by 

adding a second-earner deduction, and reducing the 

disincentives to work in other welfare programs. 

High-school dropout rates are highly correlated 

with low upward mobility. We propose a “milestone” 

credit that would give low-income teenagers a cash 

bonus upon receiving their high-school diploma. We 

propose linking welfare payments to a requirement 

that dependents are enrolled in school. We also propose 

implementing pilot programs that experiment 

with the timing of Federal Pell Grant disbursements 

to encourage graduation. 

Family structure is perhaps the strongest indicator 

of intergenerational mobility. Since the 1980s, there 

has been a staggering decline in the traditional family 

as the number of families headed by a single mother 

has doubled. We propose reforming the childcare tax 

credit to make it easier for single mothers to reenter 

the workforce, leave welfare, and climb the ladder 

of opportunity for themselves and for their children. 

We also propose ways to encourage child support. 

While mobility is possible for some, it may be 

beyond the reach of others. One of the most startling 

recent trends in welfare is that payments have 

shifted away from the truly poor and toward those 

with higher incomes. We propose streamlining existing 

tax credits and means-tested benefits to improve 

take-up rates for the poor and limit how high up the 

income distribution means-tested programs go. 

ii


FOSTERING UPWARD ECONOMIC MOBILITY IN THE UNITED STATES 

The status quo is not working. The United States 

spends nearly $800 billion every year on antipoverty 

programs, yet upward mobility is not improving. 

3 A child born into a low-income family is likely 

to stay low income. Federal policies are needed to 

encourage work, education, and stable family structures 

to improve upward mobility and reduce the 

cycle of dependence. 

iii

Fostering Upward Economic Mobility in the United States 

Introduction 

Intergenerational mobility is defined as the extent to 

which a future generation is able to move out of the 

socioeconomic class of its parents. It is generally measured 

as the change in incomes earned by individuals 

relative to their parents. A large body of academic 

work has been devoted to understanding issues of 

intergenerational mobility in the United States. This 

literature has been reviewed in a study by Solon, a 

study by Grawe and Mulligan, and a study by Black 

and Devereux. 4 

In general, the literature suggests that a person 

born into a low-income household is also likely to 

have a low income, and this has changed little over 

the years. 5 Most studies find that the intergenerational 

correlation of income is near 0.4, which means 

that a 1 percent increase in parent income translates 

to a 0.4 percent increase in child income. 6 Recent 

research for Pew Charitable Trusts suggests that 70 

percent of Americans raised in the bottom two quintiles 

will never even make it to the middle quintile. 7 

Two recent papers by Chetty and colleagues use tax 

records data for US citizens over the period 1996– 

2012, concluding that intergenerational mobility 

has stagnated in the United States over the last few 

decades and many other developed countries have 

more mobility than the United States. Moreover, they 

find that there is substantial variation in mobility 

across US geographic regions. 8 

The causal mechanisms underlying mobility 

have been the subject of significant research. Solon’s 

study using a simple but rich model to illustrate the 

Aparna Mathur (AMathur@aei.org) is a resident scholar at 

AEI. Abby McCloskey (Abby.McCloskey@aei.org) is the 

program director of economic policy at AEI. 

intergenerational transmission of earnings shows that 

transmission primarily occurs through the importance 

that family decision makers place on their children’s 

future earnings, the return to human capital 

investment, the parents’ endowments in terms of 

earnings, and nature and nurture and their intergenerational 

transmission. 9 

Roemer and Veneziani’s study considers three categories 

of circumstances through which parents may 

give their children an advantage. 10 First, parents may 

influence their children’s lifetime earnings through 

monetary and nonmonetary investments that shape 

skills, aptitudes, beliefs, and more. Second, they may 

facilitate access to jobs and schools through social 

connections. Third, there may be genetic transmission 

of innate ability, personality, and some aspects 

of health that are valued in the labor market. Corak’s 

study shows that children of top earners are more 

likely to grow up to be top earners; as a consequence, 

income inequality may worsen intergenerational 

mobility outcomes. 11 Chetty and colleagues conclude 

that there may be several factors correlated to mobility, 

including residential segregation, the availability of 

good quality schooling, and stable family structures. 12 

In this paper, we explore the role of these factors 

and possible policy responses that could boost 

mobility across the country. In the first section we 

briefly review the literature. In the second section we 

consider several policy options that might address 

specific correlates of mobility. 

Literature Review 

Research has attempted to quantify the magnitude of 

intergenerational mobility by estimating intergenerational 

correlations and elasticities in earnings and the 

1



causal mechanisms that underlie this relationship. 

Using tax record data from the period 1996–2012, 

Chetty and colleagues identify intergenerational 

mobility by regressing log child income on log parent 

income, which means comparing the change in 

a child’s income to the change in a parent’s income. 

Using this specification, they find that the intergenerational 

elasticity is approximately 0.34. In 

other words, a 1 percent increase in parent income 

translates to a 0.3 percent increase in child income 

(measured at age 30). Using a marginally different 

specification that involves ranking the parents 

of children in the same birth cohort by income and 

ranking the children based on their income relative 

to their own birth cohort, they find that a 10 percentile 

point increase in the parent rank is associated 

with a 3.41 percentile point increase in child income 

rank. Parent income is also positively related to children’s 

college attendance and teenage birth rates: a 10 

percentile point increase in parent income is associated 

with a 6.7 percentage point increase in college 

attendance rates and a 3 percentage point reduction 

in teenage birth rates for women. 

Another interesting finding from Chetty and colleagues 

is that mobility varies by geographic region. 

For example, the probability that a child reaches the 

top fifth of the income distribution conditional on 

having parents in the bottom fifth is 4.4 percent in 

Charlotte, NC, compared with 10.8 percent in Salt 

Lake City, UT, and 12.9 percent in San Jose, CA. 

Location matters most for children from low-income 

families. Spatial differences in college attendance 

rates and teenage birth rates with respect to parent 

income are very similar to the pattern in intergenerational 

income mobility. The fact that these spatial 

differences emerge before children enter the labor 

market suggests that the differences in mobility are 

driven by factors that affect children when they are 

growing up. 

In a separate study, Chetty and colleagues use tax 

records for the 1971–93 birth cohorts to assess the 

probability that a child reaches the top quintile conditional 

on the parents’ quintile. 13 Their broad conclusion 

is that for the most part, intergenerational 

mobility in the United States has not changed significantly 

over time. For example, the probability 

that a child whose parents are in the bottom quintile 

will reach the top quintile of the income distribution 

is 8.4 percent for children born in 1971, compared 

with 9 percent for children born in 1986. Moreover, 

mobility is fairly stable over time within each 

of the nine census divisions of the United States even 

though, as highlighted in the introduction, mobility 

varies significantly across the divisions. 

Intergenerational mobility in the 

United States has not changed 

significantly over time. 

Mayer and Lopoo use the Panel Study of Income 

Dynamics (PSID) to estimate the intergenerational 

elasticity for each cohort of sons born between 

1949 and 1965. 14 This paper finds that the intergenerational 

elasticity is negative, but the estimates 

are imprecise and not statistically significant. Other 

papers, such as one by Levine and Mazumder, use 

the National Longitudinal Survey (NLS) and Generalized 

Social Survey (GSS) in addition to the PSID. 15 

The NLS and the GSS show a significant increase in 

intergenerational elasticity while the PSID shows no 

significant trends. A more recent study by Lee and 

Solon using a longer panel from the PSID shows that 

for cohorts born between 1952 and 1975, intergenerational 

mobility has not changed dramatically over 

the last two decades. 16 

Black and Deveruex review recent papers on the 

topic as well as cross-country analyses. 17 For example, 

Jäntti and colleagues suggests that persistence 

(lack of mobility) is higher in the United States than 

in the United Kingdom or Nordic countries. 18 Other 

studies—for example, a study by Bjorklund and 

Jäntti, a study by Jäntti and colleagues, and a study 

by Corak—have also found that mobility in the 

United States is a lot lower than in other developed 

countries. 19 

From a policy perspective, understanding the 

causal mechanisms for this persistence is extremely 

important. Bowles and Gintis conclude that IQ 

and educational attainment can explain at most 

2



three-fifths of the intergenerational transmission of 

earnings. 20 Chetty and colleagues identify five broad 

factors that are correlated to intergenerational mobility. 

21 The strongest indicator of low mobility is family 

structure, measured by the fraction of single parents 

in the area. They also find a strong negative correlation 

between standard measures of racial and income 

segregation and upward mobility. Education likewise 

plays an important role. In general, areas with higher 

test scores, lower dropout rates, and smaller class 

sizes have higher rates of upward mobility. According 

to a study by Putnam, social capital indexes, which 

are proxies for the strength of social networks and 

community involvement in an area, are strongly correlated 

with mobility. 22 Finally, income inequality in 

an area also plays a role in mobility, although it is relatively 

weak compared to the other indicators. 

Much of the divergence in outcomes between children 

from low- versus high-income families emerges 

early on, which we will discuss later in this paper. 

Chetty and colleagues find that children’s college 

attendance rates and teenage birth rates are also linearly 

related to parent income rank. 23 A 10 percentile 

point increase in parent income is associated with a 

6.7 percentage point increase in college attendance 

rates and a 3 percentage point reduction in teenage 

birth rates. College attendance rates are 67.5 percentage 

points higher for children of the highest-income 

parents than children of the lowest-income parents, 

similar to the estimates reported by Bailey and Dynarski 

using survey data. 24 

In the next section, we discuss each of these factors 

in detail and provide possible policy suggestions that 

aim to improve outcomes along these fronts so that 

mobility from bottom to top quintiles is increased. 

Policy Suggestions 

Segregation Issues. Segregation is an important factor 

influencing economic mobility. Chetty and colleagues 

find that low-income families experience 

negative effects from living in isolation from high- and 

middle-income families. 25 First, this isolation means 

that children do not have the benefit of interaction 

with a good peer group. Second, segregation can 

lead to poor-performing schools with little parental 

involvement. Finally, segregation can result in individuals 

living in large, sprawled-out areas, meaning 

longer commutes to work, which affects their ability 

to match with good jobs. Indeed, Chetty and colleagues 

find higher upward mobility in areas with 

less sprawl. 

One of the strongest ways to build 

the human capital of disadvantaged 

neighborhood residents is through a 

greater degree of school choice. 

Similar findings emerge in a paper by Pew, which 

finds that neighborhoods matter for economic mobility. 

26 Children growing up in poor neighborhoods 

are more likely to move down the economic ladder. 

Another Pew study also finds that some states, primarily 

in the mideast United States and New England, 

have higher mobility than the national average; other 

states, primarily in the South, have lower mobility. 27 

It further highlights the role economic segregation 

plays in economic mobility. US metro areas, with 

distinct pockets of poverty and wealth, have worse 

mobility outcomes than places where those pockets 

are more integrated. 

In a recent paper, Boustan delineates three types of 

policies to overcome the problem of residential segregation: 

place-based, people-based, and indirect 

approaches. 28 Place-based policies attempt to improve 

the housing stock of poor or minority neighborhoods 

to encourage in-migration of richer households. Ellen 

advocates using “community betterment projects” 

in black neighborhoods—such as improving school 

buildings, reducing crime rates, or investing in neighborhood 

infrastructure—to encourage integration. 29 

Survey results suggest that this may be ineffective. 

People-based policies help individual homebuyers 

or renters gain access to existing neighborhoods. 

These involve lending to low-income 

borrowers irrespective of the characteristics of the 

neighborhoods in which they are purchasing a 

home. This approach is typified by the Community 

3



Reinvestment Act of 1977. Friedman and Squires 

find that this program was marginally successful in 

reducing residential segregation. 30 

Indirect policies are aimed at combating the consequences 

of residential segregation rather than root 

causes. These policies include extending public transit 

routes into poor areas (as discussed by Holzer, 

Quigley, and Raphael) or subsidizing car ownership 

to connect black neighborhoods to job opportunities 

(as discussed by Raphael and Stoll). 31 

Others have proposed investment in early childhood 

development and education to improve educational 

attainment, decrease reliance on welfare, and 

increase lifetime earnings, especially for low-income 

children. 32 However, studies show that the efficacy 

of prekindergarten programs is mixed. 33 

An immediate need is to encourage 

more participation in the labor force, 

evidenced in historical levels of 

unemployment during and after the 

Great Recession. 

One of the strongest ways to build the human 

capital of disadvantaged neighborhood residents is 

through a greater degree of school choice. In a recent 

paper, Hastings and colleagues find that school choice 

has an important impact on student test scores and 

attendance rates. 34 For students who were assigned 

their first-choice schools, truancy rates declined by 

21 percent for those entering high school. In addition, 

there was a significant improvement in test 

scores for students entering their first-choice schools. 

Students in charter schools had gains in reading and 

writing, and public and magnet school entrants had 

gains in reading and math. 

This adds to evidence that school choice programs 

can effectively raise test scores of those participating 

both by the intrinsic effect that offering choice has on 

student motivation and effort and through the benefit 

of attending a higher-performing school. Even 

students who do not go to charter schools experience 

gains. Holmes, DeSimone, and Rupp find that 

charter school competition raised composite test 

scores both in district schools and charter schools. 35 

To increase school choice, states and localities can 

implement “open enrollment” policies for a certain 

geographic neighborhood or district. This would 

allow students to choose their school regardless of 

their neighborhood. If a school is oversubscribed, 

then a lottery could be used to determine which 

students get in, ensuring that the process is random. 

Deming and colleagues find that students from 

low-quality neighborhood schools benefit greatly 

from choice and that lottery winners are more likely 

to graduate from high school, attend a four-year college, 

and earn a bachelor’s degree. 36 

Labor Market Challenges and Income Inequality. 

An interesting finding from the literature is that intergenerational 

mobility is primarily correlated with 

middle-class inequality and not with the extreme– 

upper-tail inequality that has increased dramatically 

in recent decades. This is in line with the segregation 

results discussed earlier, where the poor are made 

worse off as a result of a lack of integration with the 

middle class, rather than a separation from the rich. 

In general, a larger middle class reduces poverty and 

increases economic mobility. 

Growing the middle class requires efficient investments 

in education and human capital so they can 

be productive participants in the labor market and 

earn high returns. An immediate need is to encourage 

more participation in the labor force, evidenced 

in historical levels of unemployment during and 

after the Great Recession. Historically, increasing the 

unemployment rate by 1 percentage point has been 

shown to increase the poverty rate by 0.4 to 0.7 percentage 

points. 37 

Policies that encourage economic growth—such 

as tax reform, immigration reform, reduced regulation, 

and trade—likely would reduce the unemployment 

rate. However, these policies take time and 

thus cannot be the entirety of the solution. Examples 

of more immediate labor market policies to 

get the unemployed back to work include worksharing 

arrangements, wage subsidy programs to 

get the long-term unemployed matched with good 

jobs, rolling back licensing requirements, relocation 

4



vouchers for those in hard-hit communities, and 

expanding the EITC. 

Apprenticeship programs and training opportunities 

may also help teenagers and disadvantaged youth 

transition to jobs after college or high school. 38 One 

example is the National Job Corps Study program, 

which was designed to provide employment and 

training to disadvantaged youth and young adults. 

While the program may have modestly increased 

participant earnings and employment rates, LaLonde 

finds that the long-term benefits of the program are 

not sufficient to justify the steep costs. 39 A more market-based 

approach would be to allow employers to 

develop customized job-training programs based 

on their needs. Such programs could be financed 

through state-based grants. An experiment along 

these lines will be tried in Wisconsin this month 

through the Wisconsin Fast-Forward Initiative. This 

program allows employers to apply for grants for 

worker training, requiring that the employers hire 

the workers being trained. This enables employers to 

hire workers and provide them with the skills training 

they need to be productive on the job. 

The Congressional Budget Office finds 

that some low-income households could 

face up to a 100 percent marginal 

tax rate because of the phase-out of 

different benefits. 

Lastly, the system of tax credits and means-tested 

transfers such as the EITC, Temporary Assistance 

for Needy Families (TANF) program, Supplemental 

Nutrition Assistance Program (SNAP), and Medicaid 

or Children’s Health Insurance Program should 

be designed to minimize disincentives for work. 

The Congressional Budget Office (CBO) finds that 

some low-income households could face up to a 

100 percent marginal tax rate because of the phaseout 

of different benefits. 40 The Affordable Care Act 

further increases the effective marginal tax rate for 

individuals and families below 400 percent of the 

poverty line. The CBO suggests that these increases 

in marginal tax rates tend to decrease the supply of 

labor by inducing workers to put in fewer hours or 

be less productive. At the very least, combining some 

of the means-tested programs (such as SNAP, TANF, 

and housing vouchers) into a single program would 

allow policymakers to obtain a clearer understanding 

of the marginal tax rates faced by low-income individuals. 

(We discuss this recommendation later in 

the paper.) 

Reforming the EITC. Programs that incentivize 

work are likely to be far more successful in boosting 

incomes and mobility than simple cash assistance 

programs, primarily because people are able to 

become productive participants in the labor market. 

The Census Bureau estimates that the EITC lifted 5.4 

million people out of poverty in 2010 alone. Neumark 

and Wascher contend that the EITC is a more effective 

antipoverty program than the minimum wage or 

welfare. 41 Dahl and Lochner—who look at the EITC 

and work by Morris, Duncan, and Rodrigues—find 

that EITC benefits positively influence the outcomes 

of children. 42 Economists have also consistently estimated 

a positive effect of the EITC program on the 

employment of single mothers. 43 

An improvement to the EITC would be to expand 

the size of the credits for childless individuals. Currently, 

the majority of the benefits go to individuals 

with children, leaving out childless adults, who are 

among the least served individuals in the current 

welfare system. Childless adults are currently eligible 

for a maximum $500 credit and are not eligible for 

other support programs such as TANF. 44 While some 

research suggests that the majority of these childless 

adults are men or noncustodial parents who are 

already working, extending credits to childless individuals 

may still be an effective means to transfer 

resources to another segment of the poor without significantly 

discouraging work. 45 Expanding the EITC 

to childless adults would also improve the ability of 

single fathers, who are not the primary caretakers of 

their children, to provide child support. 

There are significant marriage penalties in the 

EITC because credit is based on family income 

rather than individual income. As a result, a married 

woman with a husband who works full time faces 

5



significantly higher tax rates with the EITC than 

without it. Also, according to Eissa and Hoynes, married 

women with children face much higher tax rates 

than single women with children. 46 Holtzblatt and 

Robelein conclude that the least expensive option 

to ease the marriage penalty would be to allow for a 

second-earner deduction. 47 This would reduce the 

amount of income subject to a tax for a two-earner 

family, thus extending and flattening the phase-out 

region. This would be more cost effective than the 

approach adopted in the American Recovery and 

Reinvestment Act, which extended the plateau of the 

EITC schedule for joint filers. 

Lastly, the high marginal tax rates faced by individuals 

in the phase-out region of the EITC may discourage 

hours worked. Eissa and Hoynes show that 

for women who are already working, an increase in 

hours worked would result in an increase in effective 

tax rates, creating an incentive to cut down on 

hours worked in the phase-out region. 48 Therefore, 

reducing the tax penalties by phasing out at a slower 

rate may be one improvement, though the trade-off 

would be that the EITC would be extended to higherincome 

individuals as well. 49 

High-Quality Schooling. Chetty finds that incomeadjusted 

test scores and dropout rates are highly 

correlated with upward mobility. The magnitude of 

the correlation between both measures and upward 

mobility is nearly 0.6. These results are consistent 

with the hypothesis that the quality of schools plays 

a role in upward mobility. Areas with greater upward 

mobility tend to have high college attendance rates 

for children from low-income families, suggesting 

that attending college is an important pathway for 

moving up in the income distribution. Low-income 

students drop out of high school at five times the rate 

of middle-income families and six times that of higher-income 

families, according to the US Department 

of Education. 50 More than 30 percent of households 

headed by someone without a GED are impoverished, 

compared to less than 10 percent of households 

headed by someone with a GED or higher. 51 

To increase high-school graduation rates, The 

Hamilton Project of the Brookings Institution has 

proposed a law requiring students to complete high 

school. 52 Currently, students are legally required to 

stay in school only through 10th grade. Enforcement 

of the current requirement is mixed, ranging 

from no punishment (Maine) to sending a notice to 

parents (Oregon) to a misdemeanor (Minnesota and 

Mississippi) to a $500 fine for a parent (Arkansas) to 

imprisonment (New York). However, many of these 

punishments are likely too small to keep a student in 

school, especially if the family is disengaged. Therefore, 

expanding the law without realigning incentives 

is unlikely to increase graduation rates. 

At minimum, we propose that TANF programs 

in all states impose an eligibility requirement that 

school-age dependents be enrolled in school. This 

would likely be a significant incentive for parents 

on welfare to ensure that their children go to school, 

We propose a milestone credit that 

would give low-income teenagers 

a cash bonus upon receiving their 

high-school diploma. 

since there are thousands of dollars at stake. Currently, 

only 15 states have such requirements. 

We also propose a milestone credit that would 

give low-income teenagers a cash bonus upon receiving 

their high-school diploma. There is a growing 

body of research on using financial incentives to 

motivate educational goals. The Accelerated Study 

in Associate Programs granted full tuition-waiving 

for full-time college at the City University of New 

York. This was found to increase graduation rates. 53 

Roland Fryer of Harvard has found that financial 

incentives can be a “cost-effective strategy for raising 

achievement among even the poorest minority students 

in the lowest-performing schools” if properly 

structured. 54 Fryer’s research shows that payments 

for inputs (for example, for reading books) are more 

effective than payments for performance (for example, 

for good tests or good grades). 

The milestone credit should begin as a pilot program 

to test its efficacy in improving graduation 

rates, the size of the credit required, and the impact 

6



on lifetime earnings. To our knowledge, such a pilot 

program has not been tried. The cost-effectiveness 

of the program on a larger scale would depend on 

policymakers’ ability to target areas with high dropout 

rates. To encourage learning beyond high school, 

the milestone credit could be increased if the student 

goes on to technical school. 

Encouraging college completion 

would greatly improve the mobility 

of low-income students. 

According to Avery and Kane, many low-income 

individuals are unlikely to pursue a college degree 

because they do not have enough information about 

college and the Pell Grant program. 55 These compliance 

costs fall most heavily on low-income individuals, 

which may deter them from applying because 

benefits are uncertain. Simplifying the application 

process could reduce costs and improve the efficiency 

of the program. 

College aid should also be reformed. The appropriate 

amount of aid is a topic of much debate, and 

we do not recommend a specific level in this study. 

However, to the extent that aid is given, it should be 

concentrated on the students who cannot afford college. 

In 2012, the federal government spent $33.4 

billion on Pell Grants, which are needs-based grants 

for low-income students. However, according to the 

CBO, roughly 7 percent of Pell Grant recipients are 

above 250 percent of the poverty line. 56 Resources 

should be transferred from those students at the 

upper end of Pell Grant eligibility to students below 

the poverty line. 

Aid should also be given with an incentive for 

students to graduate. Pell Grants amount to very 

little societal (or individual) benefit if students do 

not complete their degree. Yet a study by Bailey 

and Dynarski shows that students from the lowest 

income quartile are historically six times more likely 

to not complete college than students from the highest 

income quartile. 57 

Pilot programs should experiment with the timing 

of Pell Grant disbursements to encourage graduation. 

One option is to provide lower payments on a semester-by-semester 

basis, with the bulk of the grant 

given upon graduation. To our knowledge, this has 

not been tried. Additionally, a recent CBO report proposes 

restructuring the Pell Grant program as a loan 

program. 58 A student would receive a direct loan at 

the beginning of a term that would be forgiven at the 

end of the term upon completion of the class, giving 

students an incentive to stay enrolled for a longer 

period. Encouraging college completion would 

greatly improve the mobility of low-income students. 

According to the Bureau of Labor Statistics, in 

2012 the average unemployment rate for someone 

with only some college was 7.7 percent, above the 

6.8 percent national average. The average unemployment 

rate falls to 4.5 percent with the completion of 

a bachelor’s degree. 

Family Structure. According to, for example, a study 

by Becker and two studies by Murray, family stability 

plays a key role in children’s outcomes. 59 Since 

the 1980s, there has been a staggering decline in the 

traditional family, as the share of homes headed by 

a single mother has doubled. 60 Single mothers have 

a much higher rate of poverty (37 percent) than 

two-parent families (10 percent) or childless families 

and individuals (19.5 percent). Hoynes and colleagues 

report that changes in family structure may 

account for the entire increase in poverty from the 

1980s to 2004. 61 Chetty and colleagues evaluate the 

effect of family structure on mobility using three measures 

of family structure: (1) the fraction of children 

living in single-parent households, (2) the fraction of 

adults who are divorced, and (3) the fraction of adults 

who are married. All three measures are highly correlated 

with upward mobility, suggesting a key role 

for family structure. In other research, Lee also finds 

that the increase in family instability is an important 

factor in explaining rising family inequality. 62 

McLanahan and Sandefur argue that children who 

grow up in single-parent families or stepparent families 

have lower educational attainment than those who 

grow up with both biological parents. 63 Gruber investigates 

the effects of changes in state divorce laws on 

outcomes for children. 64 The timing of the “divorce 

revolution”—the transition from fault-based divorce 

7



to divorce by mutual consent to unilateral divorce— 

varied from state to state. Using this state variation, 

Gruber finds that unilateral divorce has a significant 

negative effect on children’s educational attainment. 

One of the reasons for changes in family structure 

is the increase in teen pregnancy rates leading 

to single motherhood at very young ages. Traditional 

prevention methods have included more birth control 

and sex education in schools. However, nontraditional 

methods are also worth exploring. Elizabeth 

Sawhill at the Brookings Institution recommends a 

social marketing campaign on teen pregnancy, citing 

a recent study by Melissa Kearney and Phillip 

Levine that found that MTV’s 16 and Pregnant show 

was responsible for one-third of the reduction in teen 

pregnancy rates in an 18-month period. 65 

Enhancing the EITC would encourage 

noncustodial parents to work and 

improve their ability to provide 

child support. 

One of the surest ways to lift single mothers out 

of poverty is to encourage them to participate in the 

workforce. Lemke and colleagues find that increased 

childcare subsidies for low-income households significantly 

increase the probability that current and 

former welfare recipients will work. 66 The tax code 

provides a care credit for children or dependents that 

is equal to 20 to 35 percent of eligible childcare costs. 

However, the amount of costs for which the credit 

may be claimed is limited to $3,000 for one child and 

$6,000 for two or more children. These limits are only 

1.5 times the 1976 values, considerably less than the 

rate of inflation or the growth in childcare costs. And 

the credit is nonrefundable, which presents a challenge 

for low-income families who might not have 

income tax liability against which to claim the credit. 

Additionally, single parents cannot claim the credit for 

childcare costs that enables parents to attend school, 

which likely limits single parents’ upward mobility. 

At minimum, the amount of the credit should be 

raised to make it commensurate with childcare costs. 

Additionally, Congress should consider making the 

childcare tax credit refundable and reforming eligibility 

so that single parents continuing their education 

can claim it for a limited period of time. While there 

is clearly a revenue loss associated with this reform, 

higher education is associated with higher earnings, 

which might prevent individuals from being on welfare 

for as long or at all. 67 

Furthermore, single mothers are more likely to 

leave and stay off welfare as the amount of child 

support increases. But the rate and level of child 

support is troubling. Sorensen and Zibman found 

that 64 percent of noncustodial fathers do not pay 

child support. 68 Of those, 23 percent are poor and 

42 percent had not finished high school, suggesting 

they might not be in an economic position to support 

a child. As previously discussed, enhancing the 

EITC would encourage noncustodial parents to work 

and improve their ability to provide child support. 

Aizer and McLanahan find that strengthening childsupport 

enforcement leads men to have fewer out-ofwedlock 

births. 69 

Concentrating Resources to Help the Truly Poor. 

While mobility is possible for some, it may be beyond 

the reach of others. For these people, the government 

has a responsibility to provide an adequate level of 

care. However, one of the most startling trends in 

welfare is that payments have in recent years shifted 

away from the truly poor and toward those with 

higher incomes. This is true across demographic 

groups Between 1984 and 2004, support for individuals 

and families below 50 percent of the poverty 

line fell, whereas support for individuals and families 

above the poverty line increased. 70 According to 

Hoynes and colleagues, as a result of this trend and 

the incentives against work and family in the current 

welfare system, increased welfare spending has produced 

only modest reductions in poverty over the 

last four decades. 71 

We propose redirecting resources from the middle 

class to concentrate support on the truly poor. 

This can be accomplished in two ways: reforming tax 

credits and reforming benefits. Hassett, Lindsey, and 

Mathur show that the bewildering array of tax credit 

programs that are primarily aimed at low-income 

8



individuals are not properly targeted. 72 In 2006, 

the government paid out about $25 billion to those 

with annual incomes above $50,000 and more than 

$4 billion to individuals in the $100,000–$200,000 

income range. These numbers are likely to be much 

higher today and do not include other tax credit 

programs. A possibility is to combine various credits 

into one simple credit. If the credit were targeted 

at low-income individuals, then its cost could match 

the current cost of credits and maintain distributional 

and revenue neutrality. Extensive work on simplification 

of these credit programs has been done by the 

President’s Advisory Panel on Federal Tax Reform and 

by Carasso, Rohaly, and Steurle; Sawhill and Thomas; 

Sawicky, Cherry, and Dent; Ellwood and Liebman; 

and Steurle. 73 

Additionally, as mentioned earlier, many of the 

92 antipoverty programs should be combined into 

a few programs. There are currently 24 federal education 

and job training programs; 20 housing assistance 

programs; 17 food aid programs; 8 health care 

programs; 5 different cash assistance programs; and 

multiple social-services programs, energy assistance 

programs, and veterans’ programs. 74 The sheer number 

of programs results in duplication and eligibility 

confusion for participants and obfuscates who 

is being helped and how. Combining some of these 

programs would provide a more transparent view of 

the distribution of current welfare benefits, including 

where gaps in coverage exist and where high marginal 

tax rates occur because of the expiration of benefits. 

Moreover, policymakers would be able to more 

effectively redirect resources to support the truly 

poor and limit how high up the income distribution 

means-tested programs go. 

Conclusion 

While the national conversation continues to focus 

on inequality and the minimum wage, upward 

mobility in the United States is behind other nations. 

Several studies—such as those by Bjorklund and 

Jäntti, by Jäntti and colleagues, and by Corak—have 

found that mobility in the United States is significantly 

lower than in other developed countries. 75 

Moreover, most studies conclude that there has not 

been a significant improvement in economic mobility 

in America over the last several decades. In this 

paper, we have reviewed the evidence on economic 

mobility, highlighted some of the causal mechanisms 

that are found to depress or improve it, and summarized 

a set of policy options that may help individuals 

move up the ladder of economic opportunity. The 

most important challenges going forward are creating 

stable family structures that will invest sufficiently in 

the education and upbringing of children and providing 

the right kind of high-quality education. 

We propose several reforms to existing welfare and 

workfare programs and incentives for teenagers and 

youth to attain higher education. If we can address 

some of these challenges, America may remain a land 

of opportunity for generations to come. 

Notes 

1. Raj Chetty et al., “Where Is the Land of Opportunity: 

The Geography of Intergenerational Mobility in the United 

States” (working paper no. 19843, National Bureau of Economic 

Research, Cambridge, MA, 2014), www.nber.org/ 

papers/w19843.pdfnew_window=1. 

2. Robert Greenstein, “Government Programs Kept Millions 

out of Poverty in 2010,” Center on Budget and Policy 

Priorities, September 13, 2011, www.offthechartsblog.org/ 

government-programs-kept-millions-out-of-poverty 

-in-2010/. 

3. According to a report from the US House Committee 

on the Budget, US antipoverty programs cost a combined 

$799 billion in fiscal year 2012. See US House Budget Committee, 

The War on Poverty: 50 Years Later (Washington, DC, 

March 3, 2014), http://budget.house.gov/uploadedfiles/ 

war_on_poverty.pdf. 

4. Gary Solon, “Intergenerational Mobility in the Labor 

Market,” Handbook of Labor Economics 3 (1999): 1761– 

1800; and Nathan D. Grawe and Casey B. Mulligan, “Economic 

Interpretations of Intergenerational Correlations” 

(working paper no. 8948, National Bureau of Economic 

Research, Cambridge, MA, 2002), www.nber.org/papers/ 

w8948.pdf. 

5. Our paper focuses on intergenerational mobility. However, 

there is also substantial evidence showing that mobility 

9



throughout a worker’s lifetime is also limited. Bradbury and 

Katz’s study transitions between income quintiles across 

successive one-decade intervals and finds that a worker in 

the top or bottom 20 percent of the income distribution has 

a 50 percent chance of remaining in that quintile one decade 

later. They find a large amount of churning among the middle 

three quintiles, which is to be expected given the yearto-year 

volatility in earnings. They also find that there is 

only a 3 percent chance that a worker will move from the 

bottom to the top or from the top to the bottom. Gottschalk 

and Danziger find similar results looking at two-decade 

spans. They also find no upward trend in mobility that 

would mitigate increased cross-sectional inequality. If anything, 

they find that mobility has decreased in the last 20 

years. See Katherine Bradbury and Jane Katz, “Are Lifetime 

Incomes Growing More Unequal: Looking at New Evidence 

on Family Income Mobility,” Regional Review 4 

(2002): 2–5, www.bostonfed.org/economic/nerr/rr2002/q4/ 

issues.pdf; and Peter Gottschalk and Sheldon Danziger, 

“Family Income Mobility: How Much Is There and Has It 

Changed” (working paper no. 398, Department of Economics, 

Boston College, Chestnut Hill, MA, 1997). 

6. Solon, “Intergenerational Mobility in the Labor Market”; 

Samuel Bowles and Herbert Gintis, “The Inheritance of 

Inequality,” Journal of Economic Perspectives 16, no. 3 

(2002): 3–30, www.umass.edu/preferen/gintis/intergen.pdf; 

Tom Hertz, Understanding Mobility in America (Washington, 

DC: Center for American Progress, April 26, 2006), 

www.americanprogress.org/kf/hertz_mobility_analysis.pdf; 

and Raj Chetty et al. “Is the United States Still a Land of 

Opportunity: Recent Trends in Intergenerational Mobility” 



w19844. 

7. The Pew Charitable Trusts, Moving On Up (Washington, 

DC, 2013), www.pewstates.org/uploadedFiles/PCS/ 

Content-Level_Pages/Reports/2013/Moving_On_Up.pdf. 

8. Raj Chetty et al., “Where is the Land of Opportunity”; 

and Chetty et al., “Is the United States Still a Land of 

Opportunity” 

9. Solon, “Intergenerational Mobility in the Labor Market.” 

10. John E. Roemer and Roberto Veneziani, “What We 

Owe Our Children, They Their Children, . . . ” (working 

paper no. 1146, Cowles Foundation for Research Economics, 

Yale University, New Haven, CT, 2006), http://cowles. 

econ.yale.edu/P/cp/p11a/p1146.pdf. 

11. Miles Corak, “Income Inequality, Equality of Opportunity, 

and Intergenerational Mobility,” Journal of Economic 

Perspectives 27, no. 3 (2013): 79–102. 

12. Chetty, “Where is the Land of Opportunity”; and 

Chetty, “Is the United States Still a Land of Opportunity” 

13. Chetty, “Is the United States Still a Land of 

Opportunity” 

14. Susan E. Mayer and Leonard M. Lopoo, “Has the Intergenerational 

Transmission of Economic Status Changed” 

Journal of Human Resources 40, no. 1 (2005): 169–85. 

15. David I. Levine and Bhashkar Mazumder, “Choosing 

the Right Parents: Changes in the Intergenerational Transmission 

of Inequality between 1980 and the Early 1990s” 

(working paper WP-02-08, Federal Reserve Bank of Chicago, 

Chicago, IL, 2002), www.chicagofed.org/digital_ 

assets/publications/working_papers/2002/wp2002-08.pdf. 

16. Chul-In Lee and Gary Solon, “Trends in Intergenerational 

Income Mobility” (working paper no.12007, National 

Bureau of Economic Research, Cambridge, MA, 2006), 

www.nber.org/papers/w12007.pdfnew_window=1. 

17. Sandra E. Black and Paul J. Devereux, “Recent Developments 

in Intergenerational Mobility” (working paper no. 

15880, National Bureau of Economic Research, Cambridge, 

MA, 2010), www.nber.org/papers/w15889.pdfnew_ 

window=1. 

18. Markus Jäntti et al., “American Exceptionalism in a 

New Light: A Comparison of Intergenerational Earnings 

Mobility in the Nordic Countries, the United Kingdom and 

the United States” (IZA discussion paper no. 1938, Institute 

for the Study of Labor, Bonn, Germany, 2006), http://ftp.iza. 

org/dp1938.pdf. 

19. Anders Bjorklund and Markus Jäntti, “Intergenerational 

Income Mobility in Sweden Compared to the United 

States,” American Economic Review 87, no. 5 (1997): 1009– 

1018; Jäntti et al., “American Exceptionalism in a New 

Light”; and Corak, “Income Inequality, Equality of Opportunity, 

and Intergenerational Mobility.” 

20. Bowles, “The Inheritance of Inequality.” 

21. Chetty, “Where is the Land of Opportunity” 

22. Robert Putnam, “Bowling Alone: America’s Declining 

Social Capital,” Journal of Democracy 6, no. 1 (1995): 

65–78. 

23. Chetty “Where is the Land of Opportunity” 

24. Martha J. Bailey and Susan M. Dynarski, “Gains and 

Gaps: Changing Inequality in U.S. College Entry and Completion” 

(working paper no. 17633, National Bureau of 

10



Economic Research, Cambridge, MA, 2011), www.nber.org/ 

papers/w17633.pdfnew_window=1. 

25. Chetty, “Where is the Land of Opportunity” 

26. The Pew Charitable Trusts, Mobility and Metropolis: 

How Communities Factor into Economic Mobility (Washington, 

DC, 2013), www.pewstates.org/uploadedFiles/PCS_ 

Assets/2013/Mobility-and-the-Metropolis.pdf. 

27. The Pew Charitable Trusts, Pursuing the American Dream: 

Economic Mobility across Generations (Washington, DC, 2012), 

www.pewtrusts.org/uploadedFiles/wwwpewtrustsorg 

/Reports/Economic_Mobility/Pursuing_American_Dream. 

pdf. 

28. Leah Platt Boustan, “Racial Residential Segregation in 

American Cities” (working paper no. 19045, National 



29. Ingrid Gould Ellen, Sharing America’s Neighborhoods: 

The Prospects for Stable Racial Integration (Cambridge, MA: 

Harvard University Press, 1999). 

30. Samantha Friedman and Gregory D. Squires “Does the 

Community Reinvestment Act Help Minorities Access Traditionally 

Inaccessible Neighborhoods,” Social Problems 

52, no. 2 (2005): 209–31. 

31. Harry J. Holzer, Steven Raphael, and John Quigley 

“Public Transit and the Spatial Distribution of Minority 

Employment: Evidence from a Natural Experiment,” Journal 

of Policy Analysis and Management 22, no. 3 (2003): 415–41, 

http://urbanpolicy.berkeley.edu/pdf/HQR2003PBWeb.pdf; 

Steven Raphael and Michael Stoll, “Can Boosting Minority 

Car-Ownership Rates Narrow Inter-Racial Employment 

Gaps” (working paper no. 27, Berkeley Program on Housing 

and Urban Policy, Berkeley, CA, 2001); and Steven 

Raphael and Michael Stoll, “Neighborhoods, Social Interactions, 

and Crime,” in Neighborhood and Life Chances: How 

Place Matters in Modern America, ed. Harriet B. Newburger, 

L. Eugenie Birch, and Susan M. Wachter (Philadelphia: University 

of Pennsylvania Press, 2011), 73–88. 

32. See, for example, Albert Wat, Dollars and Sense: A 

Review of Economic Analyses of Pre-K (Washington, DC: 

Pre-K Now, May 2007), www.pewstates.org/uploadedFiles/ 

PCS_Assets/2007/PEW_PkN_DollarsandSense_May2007. 

pdf. 

33. Katherine A. Magnuson, Christopher J. Ruhm, and 

Jane Waldfogel, “Does Prekindergarten Improve School 

Preparation and Performance” (working paper no. 10452, 

National Bureau of Economic Research, Cambridge, MA, 

2004), www.nber.org/papers/w10452.pdfnew_window=1. 

34. Justine S. Hastings, Christopher A. Neilson, and Seth 

D. Zimmerman, “The Effect of School Choice on Intrinsic 

Motivation and Academic Outcomes” (working paper no. 


MA, 2012), www.papers.nber.org/tmp/20974-w18324.pdf. 

35. George M. Holmes, Jeff DeSimone, and Nicholas G. 

Rupp, “Does School Choice Increase School Quality” 



w9683.pdfnew_window=1. 

36. David J. Deming et al., “School Choice, School Quality 

and Postsecondary Attainment” (working paper no. 17438, 



37. Hilary Hoynes, Marianne Page, and Ann Stevens, 

“Poverty in America: Trends and Explanations” (working 

paper no. 11681, National Bureau of Economic Research, 

Cambridge, MA, 2005), www.nber.org/papers/w11681.pdf 

new_window=1. 

38. Michael Strain, “A Jobs Agenda for the Right,” National 

Affairs, no. 18 (2014), www.nationalaffairs.com/publications 

/detail/a-jobs-agenda-for-the-right; and Aparna Mathur, 

“Testimony: Income Inequality in the United States,” January 

16, 2014, www.aei.org/article/economics/fiscal-policy/ 

labor/testimony-income-inequality-in-the-united-states/. 

39. Robert J. LaLonde, “Employment and Training Programs,” 

in Means-Tested Transfer Programs in the United 

States (Chicago, IL: University of Chicago Press, 2003), 

www.nber.org/chapters/c10261.pdf. 

40. Congressional Budget Office, Effective Marginal Tax Rates 

for Low- and Moderate-Income Workers (Washington, DC, 

2012), www.cbo.gov/sites/default/files/cbofiles/attachments 

/11-15-2012-MarginalTaxRates.pdf. 

41. David Neumark and William Wascher, “Using the 

EITC to Increase Family Earnings: New Evidence and a 

Comparison with the Minimum Wage” (working paper no. 

134, Northwestern University/University of Chicago Joint 

Center for Poverty Research, Chicago, IL, 2000). 

42. Gordon B. Dahl and Lance Lochner, “The Impact of 

Family Income on Child Achievement” (working paper no. 


MA, 2005), www.nber.org/papers/w11279.pdfnew_ 

window=1; and Greg J. Duncan, Pamela A. Morris, and 

Chris Rodrigues, “Does Money Really Matter Estimating 

Impacts of Family Income on Young Children’s Achievement 

11



with Data from Random-Assignment Experiments,” Developmental 

Psychology 47, no. 5 (2011): 1263–1279. 

43. Eissa and Liebman as well as Meyer and Rosenbaum 

have directly estimated the effects of the EITC on the labor 

supply of single women with children. Both papers find that 

the expansion of the EITC raised work activity among 

this group. 

44. Executive Office of the President and US Treasury 

Department, The President’s Proposal to Expand the Earned 

Income Tax Credit (Washington, DC, March 3, 2014), www. 

whitehouse.gov/sites/default/files/docs/eitc_report.pdf. 

45. Bruce D. Meyer, The Effects of the Earned Income Tax 

Credit and Recent Reforms (Cambridge: National Bureau of 

Economic Research, 2010), 153–80. 

46. Eissa and Hoynes, “Behavioral Responses to Taxes.” 

47. Janet Holtzblatt and Robert Rebelein, “Measuring the 

Effect of the EITC on Marriage Penalties and Bonuses,” 

(working paper 127, Northwestern University/University of 

Chicago Joint Center for Poverty Research, Chicago, IL, 

2000). 

48. Nada Eissa and Hilary Hoynes, “Behavioral Responses 

to Taxes: Lessons from the EITC and Labor Supply” (working 

paper no. 11729, National Bureau of Economic Research, 

Cambridge, MA, 2005), www.nber.org/papers/w11729 

.pdfnew_window=1. 

49. David T. Ellwood and Jeffrey B. Liebman, “The Middle 

Class Parent Penalty: Child Benefits in the U.S. Tax Code” 



w8031.pdfnew_window=1; and Saul D. Hoffman and Laurence 

S. Seidman, Helping Working Families: The Earned 

Income Tax Credit (Kalamazoo: Upjohn Institute, 2003), 

chapter 4. 

50. US Department of Education, Trends in High School 

Dropout and Completion Rates in the US: 1972–2009 (Washington, 

DC, October 2011), http://nces.ed.gov/pubs2012/ 

2012006.pdf. 

51. Hoynes, Page, and Stevens, “Poverty in America: 

Trends and Explanations.” 

52. Derek Messacar and Philip Oreopoulos, “Staying 

in School: A Proposal to Raise High School Graduation 

Rates” (discussion paper 2012-07, The Hamilton Project, 

Brookings Institution, Washington, DC, 2012), www 

.hamiltonproject.org/files/downloads_and_links/THP_ 

MessacarOreopoulos_CompSchool_DiscPaper_1.pdf. 

53. The program also included other incentives such as 

career counseling and finances for books and transportation, 

which may have influenced graduation rates. See 

Susan Scrivener and Michael Weiss, More Graduates: Two- 

Year Results from an Evaluation of Accelerated Study in Associate 

Programs (ASAP) for Developmental Education Students 

(MDRC, 2013), www.mdrc.org/sites/default/files/More_ 

Graduates.pdf. 

54. Bradley M. Allan and Roland G. Fryer, “The Power and 

Pitfalls of Education Incentives” (discussion paper 2011-07, 

The Hamilton Project, Brookings Institution, Washington, 

DC, 2011), http://scholar.harvard.edu/files/fryer/files/092011 

_incentives_fryer_allen_paper2.pdf. 

55. Christopher Avery and Thomas J. Kane, “Student Perceptions 

of College Opportunities: The Boston COACH 

Program,” in College Choices: The Economics of Where to Go, 

When to Go, and How to Pay For It, ed. Caroline M. Hoxby 

(University of Chicago Press, 2004), 355–94, www.hks 

.harvard.edu/fs/cavery/Student%20Perceptions%20of% 

20College%20Opportunities.pdf. 

56. Congressional Budget Office, Federal Pell Grant Program: 

Recent Growth and Policy Options (Washington, DC, 

2013), www.cbo.gov/sites/default/files/cbofiles/attachments/ 

44448_PellGrants_9-5-13.pdf. 

57. Data is from the 1980s. See Martha Bailey and Susan 

Dynarski, “Gains and Gaps: Changing Inequality in US College 

Entry and Completion” (working paper no. 17633, 



58. Congressional Budget Office, Federal Pell Grant 

Program. 

59. Gary Becker, A Treatise on the Family (Cambridge: 

Harvard University Press, 1981); and Charles Murray, Losing 

Ground: American Social Policy 1950–1980 (Basic Books, 

1984). 

60. See Hoynes, Page, and Stevens, “Poverty in America: 


61. Ibid. Another new study authored by Chetty finds 

that rates of single parenthood at the community level are 

linked to children’s economic opportunities over the 

course of their lives. 

62. Chulhee Lee, “Rising Family Income Inequality in the 

United States, 1968–2000: Impacts of Changing Labor Supply, 

Wages, and Family Structure” (working paper no. 11836, 



63. Sara McLanahan and Gary Sandefur, Growing Up with 

12



a Single Parent: What Hurts, What Helps (Cambridge: Harvard 

University Press, 1994). 

64. Jonathan Gruber, “Is Making Divorce Easier Bad for 

Children The Long Run Implications of Unilateral Divorce,” 

Journal of Labor Economics 22, no. 4 (October 2004): 

799–833. 

65. See Isabel Sawhill and Joanna Venator “Three Policies 

to Close the Class Divide in Family Formation,” Social 

Mobility Memos, www.brookings.edu/blogs/social-mobilitymemos/posts/2014/01/21-3-policies-to-close-familyformation-class-divide-sawhill#. 

A significant downside 

would be if the show induced abortions, although the 

study’s authors assert that teen abortion rates also fell during 

this period. See Melissa Kearney and Phillip Levine, “Media 

Influences on Social Outcomes” (working paper no. 19795, 


2014), www.nber.org/papers/w19795.pdf. 

66. Robert J. Lemke et al., “Child Care and the Welfare to 

Work Transition” (working paper no. 7583, National Bureau 

of Economic Research, Cambridge, MA, 2000), www.nber. 

org/papers/w7583.pdfnew_window=1. Increased funding 

for childcare subsidies and the availability of full-day kindergarten 

significantly increase the probability the current 

and former welfare recipients work. 

67. This is unlikely to duplicate support from welfare programs. 

Only 3 percent of total TANF funds are spent on 

childcare, and 27 states spend no TANF funds on childcare, 

which likely decreases the ability of a welfare recipient to 

return to work. 

68. Elaine Sorensen and Chava Zibman, “Poor Dads Who 

Don’t Pay Child Support: Deadbeats or Disadvantaged,” 

Urban Institute, April 2001, www.urban.org/publications/ 

310334.HTML. 

69. Anna Aizer and Sara McLanahan, “The Impact of Child 

Support Enforcement on Fertility, Parental Investment and 

Child Well-Being” (working paper no. 11522, National 



70. Yonatan Ben-Shalom, Robert A. Moffitt, and John Karl 

Scholz, “An Assessment of the Effectiveness of Anti-Poverty 

Programs in the United States” (working paper no. 17042. 



71. Hoynes, Page, and Stevens, “Poverty in America: 


72. Kevin A. Hassett, Lawrence B. Lindsey, and Aparna 

Mathur, “Moving toward a Unified Credit for Low-Income 

Workers,” Tax Notes, August 10, 2009, www.aei.org/article/ 

economics/fiscal-policy/labor/moving-toward-a-unifiedcredit-for-low-income-workers/. 

73. President’s Advisory Panel on Federal Tax Reform, 

“Final Report—November 1, 2005,” http://govinfo.library. 

unt.edu/taxreformpanel/final-report/; and Hassett, Lindsey, 

and Mathur, “Moving toward a Unified Credit for Low-Income 

Workers.” 

74. At least 92 US antipoverty programs that cost a combined 

$799 billion in fiscal year 2012 form a complex web 

that often contributes to keeping people poor, according to a 

report from the House Budget Committee. It is important 

for the childcare credit to stand on its own. This is because it 

provides powerful work incentives that could be lost if combined 

with other credits. See US House Budget Committee, 

The War on Poverty: 50 Years Later. 

75. See Anders Bjorklund and Markus Jäntti, “Intergenerational 

Income Mobility in Sweden Compared to the United 

States”; Jäntti et al., “American Exceptionalism in a New 

Light”; and Corak, “Income Inequality, Equality of Opportunity, 

and Intergenerational Mobility.” 

13

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