Inequality at Birth

Emmanuel Saez’s work on income inequality has been getting a lot of attention recently, for good reason. He has shown the extent to which inequality has grown rapidly in recent years. The benefit of economic growth this decade has gone almost exclusively to the extremely rich. The top 1% of the population now earn 25% of all income.

Yet I fear that this work may underestimate the true nature of inequality in our society. One of the flaw of much of the work on income and wealth distribution is that it fails to account for age. For example, my income is currently below the median household income; yet as a 23 year old with no dependents I am financially better off than the average American. The way that income and wealth distribution vary throughout the lifecycle of an age cohort is an important area where further research is needed.

In a perfect world everyone would start at the same place, as time passed differences would emerge due to talent, hard work and other elements of the meritocracy. Of course, that is not the world that we live in. Children born in wealthier families start life with a huge head start.

Marion Nestle recently noted that half of the children in America are currently eligible for government food aid. It is no secret that fertility rates in America are negatively correlated with income and education. Given the stark level of inequality present in America today, it stands to reason that inequality is even greater among newborns and young children than among the population at large.

This reality could have severe consequences for the future of the American economy and society. Numerous studies have shown how growing up in poverty can adversely affect a persons prospects for life. Is the future generation of Americans going to disproportionately suffer these consequences. Will the relative scarcity of Children from affluent backgrounds give those fortunate few an even larger advantage than the well off currently enjoy. Or will new opportunities open up to the children of the poor.

More research needs to be done to uncover the rates of inequality among households with young children, and to see how this rate has changed over time. A cohort based approach to income and inequality studies would provide a better understanding of how our society and economy is likely to evolve.

While more research is needed, I think it is clear that a significant commitment needs to be made to ensure that our future generation does not disproportionately grow up in poverty.

3 comments to Inequality at Birth

  • Do you have a link to the study that found that 50% of American children are eligible for food aid? I searched for a source for a while without success. I’m not surprised, but I would like to read more about it. It’s well known that lower income households have a higher birth rate, but I’m not sure what the solution is without instituting some sort of means test before allowing a child to leave the hospital with its parent/parents.

  • Emmanuel Tabones

    Social policy advocates love reciting statistics to bolster their various positions, but I would take all of them with a grain of salt. After all, they often downplay the costs of fulfilling their agenda. 50 percent of American children eligible for food stamps? I’m a skeptic, myself. I used to work as a cashier in an upscale supermarket in New York City and I would often see food stamp recepients coming in and purchasing items that I certainly could not afford on my meager salary, at the time.

    They were eating a lot better than I did….

  • dvb

    I quoted Marion Nestle from the Atlantic Food Blog for the 50% statistic here is the link. Looking back I realize that I misquoted the source as the 50% statistic is only in regards to infants. However, this doesn’t change my basic point.

    As far as what the policy response, I don’t the government should restrict who can have children, but greater efforts need to be made to improve the quality of life and educational opportunities available to poor children.

    Allowing a significant portion of the future generation to grow up in desperate poverty would be economic suicide for the country. Given what we know about brain development and the long term health impact of childhood nutrition, ensuring that children are eating good diets is a very good investment. Even though there is some waste and abuse in the system the benefits of food assistance to poor families far outweigh the costs.

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