Rick Santorum is right about Europe

at 10:40 AM ET, 10/12/2011

One of the more unexpected moments in Tuesday night’s Republican presidential debate came when Rick Santorum suggested that Europe might do better than the United States in some regards. “I just read a recent study,” he said, “that income mobility from the bottom two quintiles up into the middle income is actually greater in Europe than it is in America today.”

Santorum seemed to be implying that this was a new phenomenon, but it predates the current economic slump. Although polls show that Americans have long been more optimistic than Europeans about their chances of getting ahead in life, it’s not necessarily true. The Economic Mobility Project, run by the Pew Charitable Trusts, has been documenting this phenomenon for some time. Here’s a 2007 report by Julia Isaacs of the Brookings Institution pointing out that a person’s economic fortunes are much more tied to his parents in the United States than they are in Europe:

The effect, as Santorum mentioned, is particularly pronounced at the bottom: “[M]en born into the poorest fifth of families in the United States in 1958 had a higher likelihood of ending up in the bottom fifth of the earnings distribution than did males similarly positioned in five Northern European countries—42 percent in the United States, compared to 25 to 30 percent in the other countries.” (The report is mainly looking at intergenerational mobility: when you look at shorter, 5- or 10-year timespans, American workers are no less likely than European workers to move up or down the earnings ladder, except at the very low end.)

Why would this be? A 2008 working paper by Markus Gangl, Joakim Palme and Lane Kenworthy explores various hypotheses for why we should expect to see different rates of mobility in the United States than in Germany and Sweden. It’s easier to fire workers the United States, promotions are less heavily regulated by unions, and there’s more of an entrepreneurial culture. We also have higher rates of marriage. Those things should, in theory, lead to greater mobility in the United States. On the other hand, education, cognitive skills and cultural capital are more unevenly distributed in the United States than in Northern Europe. That should lead to greater mobility in Europe.

While it’s hard to tease out which factors prevail, exactly, the end results seem pretty clear—the authors found that the United States doesn’t offset its higher levels of income inequality with higher mobility.

 
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