<p>Barrons, the Treasury department study linked to earlier <a href=“http://www.treasury.gov/press/releases/reports/incomemobilitystudyfinal.pdf[/url]”>http://www.treasury.gov/press/releases/reports/incomemobilitystudyfinal.pdf</a> has data from which some information can be gleaned about the overall level of upward and downward mobility. To begin with, a certain amount of change in income over time is normal, and doesn’t signify an actual change in economic status (such as my own life experience, sketched in post #77) Most people earn more as the get older, up to a point. At retirement, that trend may reverse. Also, people in certain occupations, such as professional sports and other entertainment field jobs, tend to have early income peaks, after which their income tends to decline. In addition, a person can be right at the top (or bottom) of an income quintile one year, and ten years later, have crossed the line to the adjacent quintile, with very little actual change. Certain occupations can have significant peaks and valleys (real estate sales, for example) while yielding actual economic status of an intermediate level over time. So a certain amount of cross-quintile movement would be expected in a study which compares a snapshot of incomes one year against a snapshot of those same people’s incomes ten years later, even in an economic environment which has very little actual income mobility, with a slightly greater trend of people moving up than of people moving down over time (and being replaced at the bottom with young new taxpayers.) </p>
<p>And that’s pretty much what you see in the Treasury Dept. study. Significantly, of the people who were in the top, or fifth, quintile in 1996, only 13% had fallen to the middle quintile or lower ten years later. Of those who started in the middle quintile only 12.5% made it up to the top quintile ten years later; 4% made it to the top 10%. (Cutoff for top 10% was about 120,000 in 2005.). Of those who started in the top 1% in 1996, only 12% fell below the top quintile by 2005. When you consider that the top strata include a certain number of “one-year wonders” (lottery winners, sellers of capital gains property, etc.) to begin with, that indicates to me that, yeah, it’s basically the same group of families at each economic level, year after year, with a small number of predictable exceptions.</p>
<p>That study is based on cohorts - it compares the same taxpayers in 1996 and 2005. So, no, “half” of the middle quintile group hasn’t gone anywhere - 80% of them are still in the second, middle and fourth quintiles ten years later, with the trend, as predicted, favoring moving up over moving down, but not by large sums. The data is imperfect, but I think it’s good enough to draw some fairly reliable conclusions from.</p>