Spatial Influences in Upward Mobility

Abstract

This paper extends a canonical model of intergenerational human capital investment to a geographic context to study the role of migration in influencing income mobility in the United States. The main result is that migration is considerably influential in shaping the high rates of economic mobility observed among children from low-wage areas, with human capital investment behavioral responses being important to consider. Equalizing school quality across locations does more to reduce interstate inequality in income mobility than equalizing skill prices, and policies that attempt to decrease human capital flight from low-wage areas via cash transfers are unlikely to be cost-effective.