Stanford Economist Raj Chetty’s study, Improving Opportunities for Economic Mobility: New Evidence and Policy Lessons, published by the St. Louis Federal Reserve Bank, defines the “American Dream” as the statistical probability that a child born to parents in the bottom fifth on the income distribution scale ends up in the top fifth.
Children in the United States have a 7.5% chance of achieving that economic mobility, according to the study. By comparison, Canadian children have a 13.5% probability. The probability for children in the United Kingdom was 9%, and in Denmark, 11.7%.
But Chetty notes that the low probability for children in the United States varies by area of the country. In San Jose, Calif., there is a 12.9% chance that a child will achieve the American Dream, which is nearly on par with Canada. But in cities like Charlotte, N.C. and Baltimore, Md., that number dips to 4.4% and 3.5%, respectively.