What are the forces moving the Minnesota economy? Adam Belz tries to identify the trends and show the connections between Minnesota and the larger U.S. and global economies. You can connect with him on Twitter: @adambelz
Raj Chetty and several other economists and staff at Harvard, UC-Berkeley and the U.S. Treasury chose 40 million people (including 193,000 in Minnesota) born in the 1970s and1980s, and compared their tax returns from 1996 to 2011 to the tax returns of their parents over the same period. They've organized the data beautifully and made it available for download here.
The research tells us, by county, whether Americans in their 20s and 30s have been able to surpass their parents in income, and by how much. Across America, even in the least economically mobile areas, children do better than their parents, but the nation as a whole does not compare favorably to countries like Denmark and Sweden. But in Minnesota, and Iowa and the Dakota, children generally do quite a bit better than their parents.
"Minnesota looks like Denmark," said Chetty, in an interview this morning.
A major goal of the project was to measure intergenerational economic mobility (the American Dream), and much was written about the report in the news, some of it quite good. The New York Times made a big interactive map of the country using one dataset. It shows the percentage of children from each county who end up among the top fifth of earners even though their parents are in the bottom fifth. Lee Schafer pointed out in the Strib that in some parts of southwest Minnesota more than 18 percent of children made that impressive jump. In Minneapolis, about 9 percent of children in the cohort have been able to.
The map shows that economic mobility is less common in southeastern states (intergenerational poverty is entrenched in the Mississippi Delta), parts of Ohio and Michigan, and generally in larger cities. West of the Mississippi River and in sparsely populated regions things tend to improve.
Strong schools and economic integration are key to economic mobility, Chetty said, and rural areas do well by those measures, partly because children of all incomes tend to go to school together in small towns, unlike large cities.
Chetty said the oil and ag commodity booms in the Upper Midwest have helped more poor children end up in the top fifth of income-earners, but he says the data shows the trend runs deeper than economic shifts in the 2000s. Based on measures like college attendance and other outcomes, North Dakota, for instance was doing well even before the oil boom hit full stride.
"North Dakota looks much better in terms of other outcomes," he said.
The data is full of other information. A second measure of economic mobility the researchers used was "absolute upward mobility," which I think is just as interesting, and Chetty prefers to talk about. The number is calculated as follows: Look at earnings for children who grew up under parents in the 25th percentile for income in a certain county. If those children's average income is in the 44th percentile, then the "absolute upward mobility" from that county is 44.
That's what the map below displays. Schafer was right about southwest Minnesota. There's also the area around Thief River Falls, doing well. Pretty much all of outstate Minnesota shows up well, and even Minneapolis, at 44.2, is in the top 20 for large cities.