Movin' On Up: It's Much Harder If You Live in the Wrong Town

The fact that it's getting harder to move up the economic ladder shouldn't come as a surprise anymore. For years, studies have shown that economic mobility in America has declined, both relative to other countries and to our nation's own history. And it's not like there's any lack of culprits -- research has cited a variety of reasons, ranging from the impact of single-parent households to the importance of good schools to the effect of America's thin economic safety net. But recently, a study by economists at Harvard University and UC-Berkeley uncovered another major factor: geography.

In "The Economic Impacts of Tax Expenditures," economists Raj Chetty, Nathaniel Hendren, Patrick Kline, and Emmanuel Saez divided the country into 741 areas, most of which include urban, suburban and rural sections. They then analyzed the degree of economic mobility in each area, noting the relative difficulty that a lower-income child would face as he or she attempted to move up the economic ladder.

The toughest climb in the country is in Nome, Alaska, where a child born into the bottom fifth of households has a 2.2 percent chance of rising to the top fifth. On the opposite end of the scale, a child born in the bottom fifth of households in Gettysburg, S.D., has a 34.8 percent chance of making it to the top fifth.

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A few patterns emerged from the research: There's a whole swath of tough-to-move-up-from areas encompassing most of the Southeastern U.S., and a similarly difficult region radiating out from Chicago. On the flip side, there's a huge section of the Great Plains and another sizable section in the West where children born into poverty have a far better than average chance of making it up the economic ladder.

While the study's authors didn't offer any definitive reason for differences in relative economic mobility, they found some interesting correlations. School quality certainly had a significant impact, as did tax rates and numbers of single parents. As David Leonhart noted in the New York Times, one interesting angle was public transportation: In areas with economic segregation and poor public transportation, it was especially hard to rise out of poverty. This isn't all that surprising: The harder it is for lower-income parents to get to work, the more time they must spend neither at work earning money nor at home taking care of their children.

But regardless of whether the key factor is the quality of schools or the time parents spend in traffic, a city's economic segregation or its infrastructure spending, one thing is clear: where we live can, indeed, affect where our children are going.

Bruce Watson is DailyFinance's Savings editor. You can reach him by e-mail at bruce.watson@teamaol.com, or follow him on Twitter at @bruce1971.