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The myth of economic mobility

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A weekly presentation of downloadable charts and short analyses designed to graphically illustrate important economic issues. Updated every Wednesday.

Snapshot for July 19, 2000

The myth of economic mobility
Among the world’s wealthy countries, the United States has both high average incomes and high poverty rates. Recent research by Bruce Bradbury (UNICEF) and Markus Jantti (Abo Akademi University in Finland), for example, found that the United States has more of its population living in poverty (20.7%) than does any other advanced economy. Poverty rates in most advanced economies were less than half those of the United States: Spain (10.3%), France (9.4%), Germany (8.5%), the Netherlands (6.5%), Belgium (5.7%), Denmark (4.9%), and Sweden (2.9%).

One popular rationalization is that the higher U.S. poverty rates are not a significant social problem because the United States also offers the poor a greater opportunity to “get ahead.” We may have more poor people at any given time, the argument goes, but the deserving don’t remain poor for long.

The data in the figure, however, suggest that economic mobility is actually lower in the United States than it is in more-regulated European economies. The figure shows the share of the poor in each country that manage to escape poverty from one year to the next. In the United States, each year about 29% of the poor see their incomes rise enough to rise out of poverty — the same share as in the United Kingdom. But in all the other countries studied, the poor were more likely to leave poverty than they were in the United States: Sweden (36%), Germany (37%), Canada (42%), and the Netherlands (44%).

Average annual exit rate from poverty

Data source: A new study by Howard Oxley, Thai-Thanh Dang, and Pablo Antolin, of the Paris-based Organization for Economic Cooperation and Development (OECD).

This week’s Snapshot by EPI economist John Schmitt.

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