UniversiTY of California at San Diego, Economics Working Paper Series
This paper uncovers differences in social mobility between rich and poor families. The paper shows, in particular, that borrowing constraints retard social mobility among the poor by preventing poor parents from investing optimally in their children's human capital. This evidence contradicts several recent studies that argue that innate ability is the overriding determinant of socioeconomic success in the United States. The paper also shows that siblings' inequality seems to be independent of family wealth, which clearly contradicts the predictions of most economic models of resource allocation within the family.