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Economic factor, barrier 2 of 6

Inequality and limited mobility

Chetty et al. (2014) found the chance of a U.S. child rising from the bottom to the top income fifth ranged from 4.4% in Charlotte to 12.9% in San Jose. Growing up in a poorer family is a much better established barrier than a society's overall level of inequality, whose causal effects are debated (Wilkinson and Pickett, 2009).

Evidence

  • Global shares. The top 10% own about 75% of global wealth and receive 53% of income. The bottom 50% hold about 2% of wealth and receive 8% of income (World Inequality Report 2026).
  • Inventors. Children whose parents are in the top 1% of income become inventors at a rate of 8.3 per 1,000, compared with 0.85 per 1,000 for children of below-median-income parents (Bell et al., 2019). These studies measure parents' income, not wealth.
  • Great Gatsby Curve. Across rich countries, higher income inequality goes with lower mobility between generations, but its originator describes this as a correlation, not a causal relationship (Corak, 2013). Critics argue that with a different mobility measure the United States looks similar to Canada and Sweden (Winship, 2015).

Proposed and experimental methods

Methods that are proposed, under trial, approved in some places, or tried and then failed. Each shows a stage label and an evidence rating. A stage label shows how far a method has progressed, not whether it works. The stage labels are explained on the economic factor page.

  • Housing vouchers with search help to reach high-mobility neighborhoods (Large trial, B). In the original Moving to Opportunity experiment (4,604 families), children whose families used the experimental voucher before age 13 earned $3,477 (31%) more a year in their mid-twenties than the control group mean of $11,270, while moving as a teenager had slightly negative effects (Chetty, Hendren, and Katz, 2016). In Creating Moves to Opportunity, a randomized trial with housing voucher recipients, adding information, financial support, and customized search assistance raised the share moving to high upward mobility areas from 15% to 53%, and a second trial suggested the customized search help drove most of the effect (Bergman et al., 2024). Long-term outcomes for children in the new trial are not yet known.
  • Child development accounts at national scale (Approved but not scaled, B for program facts, C for outcomes). Builds on the Connecticut baby bonds entry in "Early-life adversity (preventing abuse and neglect)" in the biological factors. The United States created Trump Accounts in a law enacted July 4, 2025, with a $1,000 federal pilot contribution for U.S. citizen children born in 2025 through 2028. By March 31, 2026, over 4 million children were enrolled and more than 1 million were covered by the pilot contribution (IRS, 2026). In the earlier SEED for Oklahoma Kids randomized policy experiment, children in families given an account at birth showed more parent-child educational engagement and more hope for the future (1,425 families), but the published report gives significance levels rather than clear effect sizes and comes from the program's own research center (Huseynli, Huang, and Sherraden, 2025). No study yet links such accounts to adult mobility.
  • Global minimum tax on billionaires (Theoretical, contested, C). A report commissioned by the Brazilian G20 presidency proposed that people with more than $1 billion in wealth pay at least 2% of their wealth each year in tax, estimated to raise $200 to $250 billion a year from about 3,000 taxpayers worldwide (Zucman, 2024). The estimate depends on assumptions about avoidance and coordination. In France, a 2% floor tax on households with over €100 million was adopted by the National Assembly in February 2025 but rejected by the Senate on June 12, 2025, 188 votes to 129 (Legifiscal, 2025), and the Assembly rejected it again in the 2026 budget debate on October 31, 2025, 228 votes to 172 (LCP, 2025).
  • Reversed: Annual net wealth taxes in Europe (Failed or reversed, B). Twelve OECD countries had net wealth taxes in 1990, but only four still levied them on individuals in 2017. Repeals were often justified by efficiency and administrative concerns, the taxes often failed to meet their redistributive goals, and with a few exceptions revenue was very low (OECD, 2018). Using Danish administrative records around Denmark's 1989 wealth tax cut, researchers found measurable responses in reported wealth, larger among the very rich, and a substantial long-run response at the top in simulations (Jakobsen et al., 2020). The OECD report also notes that design choices strongly shape how well such a tax works.
  • Not shown to help: Opportunity Zone tax breaks for distressed areas (In wide use, B). The 2017 U.S. Tax Cuts and Jobs Act gave investors tax benefits for investing in designated low-income areas. Up to about 18 months after enactment, little or no evidence was found of gains in employment, earnings, or poverty for zone residents (Freedman, Khanna, and Neumark, 2021). A longer-run working paper found more job creation inside zones, but much of it was offset by job losses in nearby low-income areas, and resident employment gains came from jobs outside zones that likely went to new rather than existing residents (Freedman, Kouchekinia, and Neumark, 2025).

Sources cited on this page

  1. Chetty, R., Hendren, N., Kline, P., & Saez, E. (2014). Where is the land of opportunity? Quarterly Journal of Economics, 129(4), 1553-1623. Oxford Academic A Strong
  2. Wilkinson, R., & Pickett, K. (2009). The Spirit Level. London: Allen Lane. C Limited
  3. OECD (2025). Trends in Adult Learning: why is participation not more common? B Moderate
  4. Bell, A., Chetty, R., Jaravel, X., Petkova, N., & Van Reenen, J. (2019). Who becomes an inventor in America? Quarterly Journal of Economics, 134(2), 647-713. Oxford Academic B Moderate: A for the measured income gaps
  5. Bell, A., Chetty, R., Jaravel, X., Petkova, N., & Van Reenen, J. (2017). Who becomes an inventor in America? Non-technical research summary. Opportunity Insights B Moderate: A for the measured income gaps
  6. Bell, A., et al. (2018). Conference version of "Who becomes an inventor in America?" American Economic Association B Moderate: A for the measured income gaps
  7. Corak, M. (2013). Income inequality, equality of opportunity, and intergenerational mobility. Journal of Economic Perspectives, 27(3), 79-102. DOI B Moderate: for the correlation, C for any causal claim
  8. Winship, S. (2015). The Great Gatsby Curve: all heat, no light. Brookings Institution C Limited
  9. Bergman, P., Chetty, R., DeLuca, S., Hendren, N., Katz, L. F., & Palmer, C. (2024). Creating Moves to Opportunity: Experimental evidence on barriers to neighborhood choice. American Economic Review, 114(5), 1281-1337. link B Moderate
  10. Chetty, R., Hendren, N., & Katz, L. F. (2016). The effects of exposure to better neighborhoods on children: New evidence from the Moving to Opportunity experiment. American Economic Review, 106(4), 855-902. link B Moderate
  11. Freedman, M., Khanna, S., & Neumark, D. (2021). JUE Insight: The impacts of Opportunity Zones on zone residents. Journal of Urban Economics, 103407. link B Moderate
  12. Freedman, M., Kouchekinia, N. A., & Neumark, D. (2025). Understanding the employment effects of Opportunity Zones (NBER Working Paper No. 34589). National Bureau of Economic Research. link B Moderate
  13. Huseynli, A., Huang, J., & Sherraden, M. (2025). Effects of child development accounts on parent-child educational engagement and children's hope. Children, 12(9), 1136. link C Limited
  14. Jakobsen, K., Jakobsen, K., Kleven, H., & Zucman, G. (2020). Wealth taxation and wealth accumulation: Theory and evidence from Denmark. The Quarterly Journal of Economics, 135(1), 329-388. link B Moderate
  15. Zucman, G. (2024). A blueprint for a coordinated minimum effective taxation standard for ultra-high-net-worth individuals. Report commissioned by the Brazilian G20 presidency. link C Limited

Every source for this factor is listed on the economic factor page.