The American Dream is twice as likely to happen in Canada



The notion of an American Dream can be boiled down to a simple concept: a meritocracy where place of origin and social status do not preclude success for hard workers.

Talk of that dream fading has been ever-present since the Great Recession sucked 9 million jobs out of the economy and knocked down already depressed wages for millions.

Now, a study published by the Federal Reserve Bank of St. Louis has found a way to measure that decay. It does so by coming up with a simple, mathematical definition of the American Dream as represented by social mobility defined as "the probability that a child born to parents in the bottom fifth of the income distribution makes the leap all the way to the top fifth of the income distribution."

Calculated in this manner, the chances of achieving the American Dream are nearly twice as high in Canada as they are in the United States.

In the United States, children born to parents in the bottom fifth of the income distribution have a 7.5% chance of reaching the top fifth, according to Stanford's Raj Chetty, the paper's author.

For the UK, that figure is 9%, while Danish children at the lower rung of the income ladder have a 11.7% chance of climbing to the top. In Canada the figure goes as high as 13.5%.

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A man from Yemen crosses the U.S.-Canada border into Hemmingford, Quebec, Canada February 14, 2017. REUTERS/Christinne Muschi
A man from Yemen is taken into custody by Royal Canadian Mounted Police (RCMP) officers after walking across the U.S.-Canada border into Hemmingford, Quebec, Canada February 14, 2017. REUTERS/Christinne Muschi
A man from Yemen is taken into custody by Royal Canadian Mounted Police (RCMP) officers after walking across the U.S.-Canada border into Hemmingford, Quebec, Canada February 14, 2017. REUTERS/Christinne Muschi
A woman who told police that she and her family were from Sudan is taken into custody by Royal Canadian Mounted Police (RCMP) officers after arriving by taxi and walking across the U.S.-Canada border into Hemmingford, Quebec, Canada February 12, 2017. Picture taken February 12, 2017. REUTERS/Christinne Muschi TPX IMAGES OF THE DAY
A man who told police he was from Mauritania drops on his knees as he arrives at the U.S.-Canada border into Hemmingford, Quebec, Canada February 13, 2017. Picture taken February 13, 2017. REUTERS/Christinne Muschi
A man who told police that he was from Mauritania is helped up a hill and taken into custody by Royal Canadian Mounted Police (RCMP) officers after walking across the U.S.-Canada border into Hemmingford, Quebec, Canada February 13, 2017. Picture taken February 13, 2017. REUTERS/Christinne Muschi
A man who told police he was from Sudan is confronted by a Royal Canadian Mounted Police (RCMP) officer as he attempts to cross the U.S.-Canada border into Hemmingford, Quebec, Canada February 13, 2017. Picture taken February 13, 2017. REUTERS/Christinne Muschi
A man who told police that he was from Sudan is taken into custody by Royal Canadian Mounted Police (RCMP) officers after arriving by taxi and walking across the U.S.-Canada border into Hemmingford, Quebec, Canada February 13, 2017. Picture taken February 13, 2017. REUTERS/Christinne Muschi
A family from Yemen crosses the U.S.-Canada border into Hemmingford, Quebec, Canada February 14, 2017. REUTERS/Christinne Muschi
Luggage sits on the United States side of the border after a woman who told police that she and her family were from Sudan is taken into custody by Royal Canadian Mounted Police (RCMP) officers after arriving by taxi and walking across the U.S.-Canada border into Hemmingford, Quebec, Canada February 12, 2017. Picture taken February 12, 2017. REUTERS/Christinne Muschi
A woman who told police that she and her family were from Sudan is taken into custody by Royal Canadian Mounted Police (RCMP) officers after arriving by taxi and walking across the U.S.-Canada border into Hemmingford, Quebec, Canada February 12, 2017. Picture taken February 12, 2017. REUTERS/Christinne Muschi
A family from Yemen crosses the U.S.-Canada border into Hemmingford, Quebec, Canada February 14, 2017. REUTERS/Christinne Muschi
A family from Yemen is taken into custody by Royal Canadian Mounted Police (RCMP) officers after walking across the U.S.-Canada border into Hemmingford, Quebec, Canada February 14, 2017. REUTERS/Christinne Muschi
A woman who told police that she and her family were from Sudan is taken into custody by a Royal Canadian Mounted Police (RCMP) officer after arriving by taxi and walking across the U.S.-Canada border into Hemmingford, Quebec, Canada February 12, 2017. Picture taken February 12, 2017. REUTERS/Christinne Muschi
A man who told police he was from Mauritania is taken into custody by Royal Canadian Mounted Police (RCMP) officers after walking across the U.S.-Canada border into Hemmingford, Quebec, Canada February 13, 2017. Picture taken February 13, 2017. REUTERS/Christinne Muschi
The children of a woman who told police that she and her family were from Sudan are placed in a vehicle as they are all taken into custody by Royal Canadian Mounted Police (RCMP) officers after arriving by taxi and walking across the U.S.-Canada border into Hemmingford, Quebec, Canada February 12, 2017. Picture taken February 12, 2017. REUTERS/Christinne Muschi
Royal Canadian Mounted Police (RCMP) officers stand on a hill looking over the U.S.-Canada border into Hemmingford, Quebec, Canada February 14, 2017. REUTERS/Christinne Muschi
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While those percentage differences might seem fairly small, Chetty explains why they are actually pretty huge.

"When some people initially see these numbers, they sometimes react by saying, 'Even in Canada, which has the highest rates of upward mobility, the rate of success doesn't look all that high. You only have a 13.5% chance of reaching the top if you start out at the bottom,'" writes Chetty.

"It is important to remember that, unfortunately, no matter what you do, you can't have more than 20% of people in the top 20%. As such, these differences are actually quite large."

Upward mobility also varies a great deal within the United States, Chetty adds, as the following map makes clear.

mobility mapFederal Reserve Bank of St. Louis

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