Recent patterns in downward income mobility: Sinking boats in a rising tide

Abstract

This paper employs four measures of downward income mobility and 1984–1986 PSID data to examine the extent and possible causes of downward mobility. Despite modest economic growth during this period, a substantial number of Americans experienced downward income mobility, roughly 5% to 20%. The majority of the downwardly mobile initially lived with a nonelderly, Caucasian, male, less-educated, working household head. Logit analysis indicates that the following factors significantly increase the odds of downward income mobility: Male headship; minority headship; family dissolution; nest-leaving; and having a head who works in mining, construction, manufacturing, transportation, trade, or farming. The following factors significantly lower the odds of downward income mobility: Retaining the same household head; having a college-educated head; having a head who works in a professional, technical, or operative occupation; and having a head in the finance, insurance, and real estate industry.