Wednesday, February 15, 2012

Have Changes in the Law Contributed to the Decline of Social Mobility in the US?

According to a number of recent articles, the US not only leads the world in income inequality but, contrary to one of our founding myths, we now trail much of the rest of the world in social mobility (see, e.g., here and here and here). I have an intuition (but not much evidence as of yet) that this decline in social mobility is being driven, at least in part, by changes in the legal system that have rigged the rules of the game to favor those who already have wealth, making it easier for them to keep and expand their wealth from one generation to the next. For example, I can easily imagine that reductions in inheritance and other wealth-based taxes (see, e.g., here and here and here), expansions both in the duration and scope of intellectual property rights, which at some point limit rather than facilitate innovation (see, e.g., here and here), the decline of the Rule Against Perpetuities and related rise of dynastic trusts (see, e.g., here and here), have all played important parts in stopping the economic conveyor belt.

Interestingly, I haven't discovered much in the legal literature or the law-and-economics journals examining whether and, if so, how changes in the legal system have contributed to the erosion of social mobility in the US. It would seem a eminently sensible research project to undertake. Perhaps I'll do it ... eventually ... when I find some time.

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