This story appeared in the Fall 2021 Letters & Science magazine.
Ananth Seshadri spends much of his time studying the economic and social factors that allow—or prevent—a richer, fuller life for each succeeding generation.
“If America has a civic religion, it is that every child should have the same economic opportunity and have an equal chance at the American Dream,” says Seshadri, who holds the Todd E. and Elizabeth H. Warnock Chair in Economics.
But it only takes a quick scan of the news headlines to realize that the reality is far different from the dream. Over the past four decades, significantly fewer people have achieved a higher standard of living than their parents did in previous generations. According to a 2019 study, only 44 percent of Millennials (children born between 1981 and 1996) were in jobs with higher pay than their parents when both were age 30, while 49 percent had positions with a lower salary.
“While talent is broadly distributed across America, economic opportunity is not,” Seshadri notes. To economists, economic opportunity is a dynamic concept that includes how resources accumulated by one generation are translated into the next one.
While location clearly plays a role—it’s easier to move up in a thriving city than in an economically depressed one—there are also several other factors at play. Over the past decade, Seshadri has been among the leading researchers trying to understand what has changed, by examining the connection between parents’ education and financial success and the social mobility of their children.
“What I am trying to do is to disentangle the causal effect of a mother’s education and earnings on her children’s education,” Seshadri explains. “In the age-old literature, they used to call it nature versus nurture—the advantages you were born with as opposed to what you learn. If you hold fixed the child’s education, what can you say about the child’s possible earnings, conditional on the mother’s education? The answer to this question helps isolate the significance of being raised by educated parents.”
From a public policy standpoint, it is a critical question to answer. If the correlation between generations is largely causal—your parents are well off and educated, and therefore, so are you—then it’s possible that policy initiatives could have a significant and long-lasting impact on social mobility. If that’s not the case, such policies would have far less impact.
One of the causal factors identified by Seshadri’s research is called “parental spillover”—the idea that a parent’s human capital—the available time and ability they have to teach and interact with their children— has a significant effect in determining how talented those children will grow up to be. Not surprisingly, that concept is tied to the parent’s economic standing. If the parents are working constantly and struggling to make ends meet, they’re less likely to have time and energy to invest in their children’s human capital.
“Conditional on measures of innate ability, the correlation between parental income and children’s educational attainment is larger now than it was decades ago,” says Seshadri. This means that children are more likely to do better if their parents are doing well right now.
Where might social policy make a difference? Seshadri’s research indicates that the opportunity for greatest impact comes in early childhood. Shifting education subsidies to the period when children are ages 0–5, instead of waiting until they’re college-age, appears to have the largest effect on the next generation’s social mobility.
“Learning earlier affects the ability to learn later,” he explains. “Small differences early on could generate large differences later in life, which are then transmitted into future generations.”
More recently, Seshadri has turned his attention to identifying and exploring some of the factors that impact the timing of children, as well as how many children parents end up having—which is proving to also affect social mobility.
Unintentional pregnancies tend to be more prevalent among low-income adults. Seshadri’s research reveals that unintended children are likely to have worse future outcomes because their parents are likely to be more financially constrained and the family structure is likely to be less stable.
“These two facts combined generate a poverty trap that significantly reduces social mobility,” Seshadri says. “In fact, unintended fertility rate is the strongest predictor of intergenerational mobility among all traditional measures including residential segregation, inequality and social capital.”
Seshadri and his co-researcher looked at the rates of unintended pregnancies in each state, finding that states with higher rates also have lower rates of intergenerational mobility.
“Ensuring equal access to family planning and contraceptives would help to reduce this gap and boost mobility across generations,” he says.
