It is a foundational element for a well-functioning democratic society and provides evidence about the ability of an economy to provide opportunities for its citizens. A standard approach to measuring income mobility is to compare where a child is in the income distribution relative to where the parents were in the income distribution. A striking result is that intergenerational income mobility in the U.S. – a child’s chances of moving up in the income distribution relative to her parents – has remained stable over the past half century. However, because of the increase in income inequality, the consequences of being born to low-versus high-income parents are larger today than in the past. One explanation for the lack of a correlation between income inequality and income mobility in the U.S. is that income inequality is strongly influenced by the top one percent of the income distribution, but there is little correlation between income mobility and this top income percentile.2 While income mobility in the United States has been relatively unchanged, it remains well below several other nations. According to Stanford economist Raj Chetty, the probability of moving from the bottom quintile to the top quintile is 7.5 percent in the United States, as compared to 11.7 percent in Denmark and 13.5 percent in Canada – two countries with relatively high levels of intergenerational mobility.3 So effectively the chance of achieving the American Dream is not the highest for children born in America.
The policy rate has been raised markedly over a short period, and monetary policy is beginning to have a tightening effect on the economy. This may suggest a more gradual approach to policy rate setting. The future policy rate path will depend on how the economy evolves. The outlook is more uncertain than normal, but we will most likely raise the policy rate again in December, when we will also present this year's fourth Monetary Policy Report with new forecasts for the Norwegian economy. 2/3  BIS - Central bankers' speeches  3/3  BIS - Central bankers' speeches