One key to earning a higher income: Rich friends in childhood

 

https://www.cbsnews.com/news/economic-mobility-poor-children-rich-friends-study-raj-chetty/

 

 By Aimee Picchi

August 1, 2022 / 1:51 PM

MoneyWatch
One key to earning a higher income: Rich friends in childhood
moneywatch

By Aimee Picchi

August 1, 2022 / 1:51 PM / MoneyWatch

Economic mobility has taken a hit in the U.S., with only half of 30-year-olds earning more than their parents had at their age, down from 90% in earlier generations. But one key to earning more in adulthood may be the company you keep in childhood, according to a new study.

The difference between kids who grow up with rich friends and those who lack such ties can be striking, according to the findings from researchers at Harvard, Stanford, New York University and the Santa Fe Institute in collaboration with Meta and Opportunity Insights. The research was published in the science magazine Nature on Monday.

For instance, a poor child who grows up in Minneapolis, where there's greater integration between low-income and wealthy kids, reaches an average income of $34,300 by age 35 — or almost $10,000 more annually than the typical income of a poor kid from Indianapolis, where there are fewer social connections between the two sides of the wealth spectrum, the study found. 

The research has implications for communities across the U.S., especially as schools are becoming more economically segregated as high-income families seek out homes in wealthier communities that have better-funded schools.

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