Canada 2020

Corak: Is the U.S. Still a ‘Land of Opportunity’?

January 10, 2012

BY: Miles Corak, University of Ottawa.

Corak examines economic mobility in the US vs. Canada.

Canada is still more economically mobile than the US: if you are rich and want to stay rich, it is better to be born in the US. If you are poor and want to move up, Canada is a better bet.

The New York Times posed this question to a group of experts, Richard Florida, Isabel Sawhill, Timothy Smeeding, and five others, including me.

More specifically, they asked:

There is a growing consensus that it is harder to move up the economic ladder in the United States than in many other places, like Canada. Should more Americans consider leaving the U.S. to get ahead? Or can the U.S. make changes to be more of a “land of opportunity”?

You can review all the contributions, and the resulting commentary from readers on the Room for Debate section of the Times website.

My response was based in part on a paper I co-wrote with Shelley Phipps and Lori Curtis, “Economic mobility, family background, and the well-being of children in the United States and Canada”, that was recently published by the Russell Sage Foundation.

I’d be interested in your comments, particularly from Americans in Canada and from Canadians in America, on my take:

Most American and Canadian children of middle class parents don’t have their life chances noticeably determined by their family background.

But averages conceal as much as they reveal.

If I were a young American born to top earning parents I would want them to stay put: these high-achievers are not only rich but also well-connected and informed. They can give me the education, health care, housing, and other investments that would set me on a path to attend some of best colleges in the world. I would enter a labour market that rewards my education to a much greater degree than in Canada, and a tax system that lets me keep more of my earnings.

My odds of staying in the top 10% as an adult if I were a child born in the top 10% are better than 1 in 4. I’d have a better than 50% chance of staying in the top third. In Canada only 1 in 7 kids born to top earning parents become top earning adults, and almost 10% fall to the very bottom, something that happens to only 3% of rich American children.
A rich kid does well in the US; but not a poor kid.

If I were born to parents in the bottom 10% I would rather they were raising me in Canada. Being in the bottom 10% would mean less hardship: my family income would be greater; I would be more likely to be living with both of my biological parents; I would be visiting a doctor regularly; and I would spend more time with my parents, particularly my mother during my infancy as she would have almost one year of paid parental leave.

My physical and mental well-being, general happiness, and cognitive development would be noticeably superior even at a very young age.

My early education would be of higher quality because it is funded through progressive income taxes, not local property taxes. I would have access to a good quality college or technical training at relatively affordable tuition fees of $5,000 to $10,000 a year.

In short, the Canadian playing field is more level than the American, and my chances of moving into the middle class would be higher. If my parents lived in the US I would have more than a 1 in 5 chance of being stuck in the bottom 10% of the earnings distribution and a 50% of staying in the bottom third. In Canada I’d be less likely to remain in the bottom, and would have a 50% chance of reaching the top half.

—————
Miles Corak is a professor at the University of Ottawa trained in labour economics, and working on child rights, poverty, immigration, social and economic mobility, unemployment, and social policy. For more on this topic see his blog (http://milescorak.com/).

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