Revisiting the American Dream: Social Mobility and Poverty in the United States

Abstract

Nowadays, a growing number of Americans are losing faith in or questioning the matter-of-factness of the American Dream. A major culprit of this situation is the pernicious effect of poverty that has been lingering, while mostly remaining intractable over time. This paper endeavors to explore another avenue of solutions to address poverty through social mobility.

Using a time series dataset within a vector error correction model (VECM), it has been uncovered that the pursuit of social mobility exerts a depressing effect on poverty. Based upon these findings, this investigation argues that diligent economic policies to promote the human development index (HDI) in the US, especially by furthering efforts to prop up outcomes in education and healthcare. Moreover, revitalizing, reinforcing, and expanding social overhead capital, to improve the letter grade C on America’s current infrastructure Report Card, will provide a comprehensive solution to making lasting inroads in both the fight against poverty and the enhancement of social mobility.

JEL Classification: I31, I32, O51, C82.