Principles of Economics- Mankiw (5th) 434

Principles of Economics- Mankiw (5th) 434 - 446 PA R T S I...

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446 PART SIX THE ECONOMICS OF LABOR MARKETS ECONOMIC MOBILITY People sometimes speak of “the rich” and “the poor” as if these groups consisted of the same families year after year. In fact, this is not at all the case. Economic mo- bility, the movement of people among income classes, is substantial in the U.S. economy. Movements up the income ladder can be due to good luck or hard work, and movements down the ladder can be due to bad luck or laziness. Some of this mobility reflects transitory variation in income, while some reflects more persis- tent changes in income. Because economic mobility is so great, many of those below the poverty line are there only temporarily. Poverty is a long-term problem for relatively few fam- ilies. In a typical ten-year period, about one in four families falls below the poverty line in at least one year. Yet fewer than 3 percent of families are poor for eight or more years. Because it is likely that the temporarily poor and the persistently poor
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