Raj Chetty

Thanks for having me, Lynn.

The way I think about the American dream is I think a cornerstone aspiration of our country that through hard work, any child should have the chance to move up in the income distribution relative to their parents.

And so if we ask in the data, how likely is that to actually happen in practice?

Turns out that for kids born in the middle of the last century, say back in 1940 or 1950,

More than 90% of those kids went on to earn more than their parents did.

But if you look at what has happened over time, you see that there's been a dramatic fading of the American dream, such that for children born in the 1980s or 1990s who are becoming adults now and entering the labor market, it's basically become a 50-50 shot, a coin flip as to whether you're going to do better than your parents.

So in that sense, Lynn, the American dream is less accessible than it used to be in the past.

Part of the reason for the fading of the American dream is indeed a decline in economic growth.

About one third of it is caused by lower growth rates in recent years.

But actually, two thirds of it is caused by a different phenomenon, a change in how that growth is distributed.

In the 40s and 50s, everyone kind of got ahead together.

Everyone's incomes went up.

In more recent years, growth has been skewed primarily to people at the very top of the income distribution.

And so the growth that we have is benefiting a large part of the population, much less, and wages are stagnating for people at the bottom of the income distribution.

I think that underlies a lot of the frustration that people around the U.S.

feel that this is no longer a country where it's easy to get ahead.

That's correct.

Here we're talking about how much you are earning and whether that's more or less than what your parents earned, separate from what's happening with government subsidies.

Although, of course, government subsidies may affect how well children end up doing.

They may affect how much people choose to work and so on.