Mostly summarized from Gregory Mankiw’s Principles of Economics, 5th Ed.
PART 6 The Economics of Labor Markets
Chapter 20 of 36 Income Inequality and Poverty
Section 9 of 20
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In the U.S. economy, economic mobility, movement of people among different income classes, is substantial.
Movements up and down the income ladder is due to many factors including hard work, education amount, good luck, and disinterest.
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Because of mobility, many are only temporarily below the poverty line.
Poverty is a long-term problem for relatively few families.
In a typical ten-year period, about one fourth of families fall below the poverty line for a year or more.
Fewer than three percent of families are poor for eight or more years.
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Another way to gauge economic mobility is the continuance of economic success from generation to generation in a family.
Economists have found having an above-average income tends to carry over from parents to children, but often not.
If a father earns 20% above his generation's average income, his son will on average earn 8% above his generation's average income.
There is only a small correlation between the incomes of a grandfather and his grandson.
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One result of this mobility is the U.S. economy is filled with self-made millionaires whose children and grandchildren squandered their inherited fortunes.
According to one study, among millionaires
· four-fifths are self-made, mostly by starting a business or by rising to the top of a large corporation
· one-fifth inherited their fortunes
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What are the main causes of personal economic success (more income and wealth) and what are the main causes of personal economic failure (less income and wealth)?
ChatGPT:
Main Causes of Personal Economic Success:
Education and skills: Higher levels of knowledge, training, and adaptability increase earning potential.
Discipline and saving: Consistent budgeting, investing, and delayed gratification build long-term wealth.
Work ethic and productivity: Reliability, persistence, and efficiency often lead to promotions or business growth.
Opportunity and networking: Access to good jobs, supportive mentors, and strong professional ties.
Risk management: Wise financial planning, diversification, and avoiding unnecessary debt.
Lifestyle preference: Prioritize work with more money over leisure with less money.
Main Causes of Personal Economic Failure:
Poor financial habits: Overspending, debt misuse, or lack of saving/investing.
Low or obsolete skills: Failure to adapt to changing job markets or technologies.
Lack of discipline or consistency: Irregular work effort or impulsive decisions.
External shocks: Health problems, job loss, inflation, or family crises.
Environment and mindset: Negative attitudes, poor networks, or growing up in economically limiting conditions.
Lifestyle preference: Prioritize leisure with less money over work with more money.
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reliability, persistence, efficiency
shinrai-sei, nebaridzuyo-sa, kōritsu-sei
信頼性、粘り強さ、効率性
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