Magazine article The Wilson Quarterly

Not Keeping Up with the Joneses. (Society)

Magazine article The Wilson Quarterly

Not Keeping Up with the Joneses. (Society)

Article excerpt

"Issues in Economics" by Katharine Bradbury and Jane Katz, in Regional Review (2002: Qtr. 4), Federal Reserve Bank of Boston, 600 Atlantic Ave., Boston, Mass. 02106.

Call it the deal behind the American dream: Americans have tacitly agreed to accept more income inequality than Europeans do in return for a freer economy and more opportunities for individual upward mobility. In other words, the gap between rich and poor might be wider than in Europe, but Americans believe they have a better chance of jumping it.

Now, however, it appears that the deal maybe in jeopardy. It's widely accepted that income inequality has grown during the past few decades, note Bradhury and Katz, both of the Federal Reserve Bank of Boston. But new evidence suggests that, at the same time, the indispensable tonic of economic mobility has lost some of its potency.

During the 1970s (actually, 1969-79) for example, on]y 49.4 percent of the working-age households that began the decade in the bottom 20 percent of earners were still in the bottom quintile at the end of the decade [see chart]. During the 1990s, however, 53.3 percent of the families that started off in the lowest quintile were still there 10 years later. …

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