How colleges affect social mobility in AmericaJan 31st 2017, 17:12 by THE DATA TEAM
IS THE American elite born or made? A new study by a team of economists tackles this question. By matching data from the Department of Education with 30m tax returns, the authors examine in unprecedented detail how much graduates of different colleges earn, and how earnings vary according to parental income. Family background seems to matter—a lot. An American whose household income while growing up was in the lowest fifth has just a one-in-ten chance of reaching the top fifth of earnings themselves. This is just half what would be seen if parents did not pass any earnings advantage on to their children.
For those who start in poverty, a path to prosperity does exist. Lower-income students who attend an elite university have nearly the same chance of reaching the upper-middle class as do their better-heeled peers. Regardless of family income, a graduate from one of the Ivy League-calibre institutions, a clutch of America's most prestigious universities, has roughly a two-thirds chance of making it into the top 20%.
But the elite universities enroll just a small share of the country′s college students. And the top 1% is much harder to break into. Even though the authors exclude income earned from investments, trust-fund babies are still much more likely to reach the pinnacle of the American income distribution than their college classmates are (see article). Americans may be raised on "Horatio Alger" tales of rags to riches, but in reality those who manage to break into the elite are few and far between.
“Mobility Report Cards: The Role of Colleges in Intergenerational Mobility” (Raj Chetty, John N. Friedman, Emmanuel Saez, Nicholas Turner, Danny Yagan; 2017)