Matt Fannin | 8/23/2017 4:50:39 PM
J. Matthew Fannin and Vikash Dangal
Many local communities are concerned about the futures of their next generation. Individuals will often look to indicators such as poverty, per capita income or the unemployment rate as a yardstick of the success or failure of communities to provide a better future for their children. Louisiana has often struggled with having more than one-third of its parishes classified as persistent poverty parishes; that is, parishes that have had at least 20 percent of their population below the federally defined poverty income level for three consecutive decades.
However, using measures such as poverty or per capita income may be an imperfect approach to looking at a community's ability to provide for its children's economic success. LSU AgCenter economists are evaluating alternative measures of a Louisiana community’s ability to provide a fertile environment for children's economic prosperity. In particular, the economists want to answer the question: "Will my children be economically better off than I am?"
AgCenter economists have taken advantage of newly available data from Raj Chetty at Stanford University that measures intergenerational economic mobility, define as the expected change in the economic performance of children compared with their parents. Specifically, a subset of parents were identified in each parish whose household income was at the 25th percentile of U.S. household income between 1996 and 2000 (approximately $29,000). Next, the subset of their children born between 1980 and 1982 was identified by matching the children’s tax identification numbers with the tax records of their parents, where they would be listed as dependents, between 1996 and 2000.
The incomes of these children were then measured based on their 2011-2012 income tax records when they were approximately 30 years of age. The incomes for each parish were then averaged and match with the U.S. percentile that average represented. A parish’s children would be considered upwardly mobile in income if their 2011-2012 income percentile was greater than 25, the income percentile of their parents.
A map of upward mobility by Louisiana parish is presented in Figure 1. Average U.S. countywide upward mobility is approximately 43.4. This means children from the average county whose family income was at the 25th percentile increased their income ranking by just more than 18 percentile points (43.4 – 25). The statewide Louisiana parish average was 41.2, or just more than two percentile points below the nationwide average. There were 14 parishes with upward mobility levels higher than the national average, led by LaSalle Parish with an upward mobility level of 50.8. The parish with the lowest upward mobility was Orleans Parish at 34.8. On average, rural parishes had higher upward mobility in income than urban parishes, with the most rural parishes averaging 42.1 compared to metropolitan parishes averaging 40.9. However, like the overall U.S. measure, rural Louisiana had some of both the highest and lowest levels of upward mobility. In particular, many rural parishes in central and southwest Louisiana showed some of the highest levels of upward mobility, while parishes in the extreme northeastern part of the state had the lowest upward mobility.
It is believed that some of the same factors that affect upward mobility in income of the next generation also affect poverty levels. As a result, economists ranked from one to 64 both the upward mobility score and the poverty level in each parish in 2000. Place-based factors in each parish in 2000 that would contribute to high poverty levels may also influence lower upward mobility of children from these regions.
Of the 41 parishes in Louisiana with poverty rates of 20 percent or higher, 25 parishes ranked higher in upward mobility than poverty. The parish with the greatest difference in upward mobility rank was Evangeline Parish (upward mobility sixth, poverty 61st) followed by Catahoula Parish (upward mobility third, poverty 56th) and St. Landry Parish (upward mobility 15th, poverty 59th). In three parishes, the upward mobility rank and the poverty rank were the same (Desoto, Madison and Winn). The parishes where upward mobility ranked lowest relative to poverty were East Baton Rouge Parish (upward mobility 56th, poverty 16th), St. John the Baptist Parish (upward mobility 54th, poverty 14th) and St. Tammany Parish (upward mobility 34th, poverty first). Parishes that had a higher upward mobility rank than poverty rank are shown with crosshatching in Figure 1. Figure 1 shows that most of the parishes in northeast Louisiana, southwest Louisiana and the Acadiana region had upward mobility ranks exceeding their poverty ranks.
Future research for LSU AgCenter economists will focus on the factors that drive some parishes to outperform. In southwest Louisiana and parts of Acadiana, it is likely that the timing of the oil and gas boom during 2011-2012 resulted in children who remained in these parishes earning incomes sizably higher than their parents working in the same industry between 1996 and 2000, even after adjusting for inflation. In addition, because the upward mobility data do not distinguish the residential location of the children, a large percentage of children in some high upwardly mobile parishes may have migrated from the parish of their childhood to different parishes or states to live and work.
These results may suggest certain strategies for Louisiana parishes. In general, local and state policies that promote increased educational attainment and skill development will result in increased incomes for residents, especially for those willing to move (either to other locations in state or out of state). For the proportion of children who will continue to live in Louisiana when they become adults, both rural and urban parishes should continue to work collaboratively to strengthen regional job opportunities. Further, strategies that focus on improving transportation networks to reduce travel time will allow in-state residents to extract additional returns to their investments in education and skills.
J. Matthew Fannin is
the William H. Alexander Endowed Professor and Vikash Dangal is a graduate
research assistant in the Department of Agricultural Economics and
Figure 1. This figure shows the U.S. household income percentile of 30-year-olds in 2011-2012 who were teenagers in the respective parishes between 1996 and 2000. Parishes that are crosshatched ranked higher in children’s upward mobility during the period than the poverty rank in 2000.