The Relationship Between Economic Connectedness and Poverty Rates

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If you live in an area with more concentrated poverty, you have a lower chance of rising up the income distribution. Poor neighborhoods seem to have poorer prospects for upward mobility because they have less interaction across class lines. If low income kids were to grow up in neighborhoods where the average high income kid typically grows up, they would increase their incomes by about 20%.

Economist Raj Chetty of Harvard University talks about his work on economic mobility with EconTalk host Russ Roberts. The focus is on Chetty's recent co-authored study in Nature where he finds that poor people in America who are only connected to other poor people do dramatically worse financially than poor people who are connected to a wider array of economic classes. The discussion includes the policy implications of this result as well as a discussion of Chetty's earlier work on the American Dream and the challenge of Americans born in recent decades to do better financially than their parents.