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Study says most follow in fathers' financial footsteps
If your ancestors were rich -- or poor -- you're likely the same, writes
Misty Harris, although that tendency may be less pronounced in Canada than in
the United States and Europe. The Ottawa Citizen, Ottawa Ontario, by Misty
Harris, April 22, 2006 In what sounds like the life philosophy of Paris
Hilton, an international economics study has found "it's not what you know but
... how rich your father is that matters."
The report, presented this week at the annual meeting of Britain's Royal
Economic Society, identifies a strong relationship between the earnings of
parents and their children. In all regions studied -- Britain, the U.S., Norway,
Sweden, Denmark and Finland -- "inherited" economic status was most pronounced
for those born into very poor or very affluent families.
Researchers concluded that Cinderella-like aspirations of upward mobility --
particularly those linked to the "American dream" -- are far less attainable in
these countries than once thought.
"In most countries, persistence is greater among the highest earners than among
the lowest earners," says Robin Naylor, an economist at the University of
Warwick and co-author of the study. "But in the U.S., persistence is at its most
marked among the particularly poor -- the poorest 20 per cent, for example.
Thus, the rags-to-riches story is especially unlikely in the U.S., of all
places."
The report, which included 2,000 American parent-child pairs, looked at sons
born in the late 1950s and measured earnings in their 30s and 40s against those
of their fathers at a similar age.
Frank Atkins, a professor of economics at the University of Calgary, says the
findings are consistent with a mounting body of evidence for inherited economic
advantage. And, he says, it's not just how much money your father earned that
matters, but how much your grandfather, great-grandfather and
great-great-grandfather earned.
"There are some people who break through ... because we're always hearing
(rags-to-riches) stories," says Mr. Atkins. "But what the statistics will tell
you is that, on average, it just doesn't happen."
The story is more encouraging in Canada.
Although one-third of Canadian children from low-income families go on to become
low-income adults, Statistics Canada economist Miles Corak reports that almost
one-fifth of those born at the bottom rung ultimately climb to the top.
"The story for Canada is a good-news story when comparisons are made to the U.S.
and some European countries," says Mr. Corak, who edited the 2004 report
Generational Income Mobility in North America and Europe.
"The education system has a lot to do with it, the structure of labour markets
has a lot to do with it, and investments within the family has something to do
with it. Those three things together determine the average effect that you're
seeing."
Mr. Corak believes inequity at the bottom and top of the income scale is
everyone's problem.
"This whole message is important because it speaks to equality of opportunity,"
he says. "Regardless of where you are in the political spectrum, we can all buy
into the notion that people's success in life should be based on their own
energies and talents and not on something they inherit by the accident of
birth."
The Ottawa Citizen 2006 |